Francis A. Kwansa

Bankruptcy cost and capital structure: the significance of indirect cost.

Abstract The purpose of the paper was to estimate the size of indirect bankruptcy cost for bankrupt restaurant firms and to show its significance to firms in their capital structure decision. Indirect bankruptcy cost estimation was based on expected sales and profits given the firms performance prior to the onset of sales decline. The significance of indirect bankruptcy cost in the capital structure decision was shown by comparing the trade-off between the tax savings from leverage and the cost of financial distress. The study shows that indirect bankruptcy costs are indeed critical and substantial, perhaps more substantial relative to direct costs.

Financing the lodging industry in the next millennium

Abstract Lending to the industry has seemed to occur in 5-year cycles where lenders alternate between a period of marked flexibility with generous lending terms and then followed by a period of austere lending terms. During the last decade of the 20th century indications are that there is prudence both in the demand and supply markets and some expect that this environment will persist long enough into the new millennium to prevent the recurrence of the boom and bust cycle of hotel financing. With many new financial instruments and new sources of financing introduced in the last decade of the century this paper presents the results of a Delphi study about lodging financing in the next millennium. It highlights the predictions of selected experts from the lodging and financial services industries.

Risk-Return Analysis of Fast-Food Versus Casual-Dining Restaurants: Who Moved My Cheeseburger?:

The study demonstrates how a hypothetical investor or a restaurant industry executive can assess the risk-adjusted performance of fast-food and casual-dining restaurant segments by using both traditional and contemporary risk-adjusted performance measures. This study focuses on 24 casual-dining and 18 fast-food restaurants that are publicly traded on major U.S. stock exchanges. The results revealed that casual-dining firms out-performed fast-food restaurants in all performance aspects: mean return, standard deviation, the Sharpe Ratio, the Sortino Ratio, and the Upside Potential Ratio. The article offers suggestions for potential investors about how to utilize downside risk measures in their capital investment decisions.

Using IRR and NPV models to evaluate societal costs of tourism projects in developing countries

Abstract This paper examines some societal costs involved in tourism development in developing countries, and argues – using the theory of developmental economics – that although the social value of an act of tourism investment should exceed its social cost, the valuation techniques used to estimate these costs during the investment decision process are not fully developed. It provides modified internal rate of return ( IRR ) and net present value ( NPV ) models, as possible measurement tools to be considered in the investment criteria to help solve this problem. Policy makers can incorporate these models into studies of tourism’s overall desirability.

An Event Study of the Delisting of Hospitality Stocks in the United States

Managers make important corporate strategic investment decisions such as mergers and acquisitions to improve the long-term competitiveness of their organizations; while at times they may be forced to manage for the short-term in order to satisfy the demands from the stock market. However, there is a lack of empirical research to examine the short- versus long-term view of management decision-making. This study analyses the mergers and acquisitions activities in the hospitality industry and particularly, investigates delisting behaviour of publicly traded hospitality firms and whether companies exhibit distinct patterns before delisting. Consolidation is prevalent in a maturing industry such as hospitality which currently faces a fiercely competitive global environment. The results of the study show that there is substantial difference between hospitality and non-hospitality stocks: not much information leakage in the delisting of hospitality stocks and a marked increase in institutional holdings with time but significant information leakage in non-hospitality stocks as reflected by positive and significant abnormal returns.

Link Between Executive Stock Ownership and Corporate Financial Performance

This study examined the relationship between executive stock ownership and the financial performance of firms in the hospitality industry. The study sample included 30 public hospitality companies listed on NASDAQ, all of which had 14 years of complete financial data. The study used the Pearson correlation and linear regression analysis to test the relationship in the hotel segment, the restaurant segment, and the combined hospitality segment. The results show there is no statistically significant positive relationship between executive stock ownership and firm profit in the hotel segment, whereas in the restaurant segment, there is a negative linear relationship. Furthermore, the combined 30 hospitality companies show a slight negative linear relationship. The findings neither support the “Agency Theory,” nor reveal a clear correlation between executive stock ownership and the profit performance of firms in the hospitality group.

The Impact of Terrorist Bombings on the Market Values of Hospitality and Tourism Enterprises: Global Evidence From Turkey, Spain, and Indonesia

ABSTRACT The last two decades witnessed numerous international terrorism incidents, some of which were specifically aimed at tourists or were at least intended to hamper visitor inflows. However, there is no empirical evidence explaining and measuring the effect of terrorist attacks on the market value of tourism enterprises. This study looked at the effect of the recent terrorist bombings in Bali (Indonesia), Istanbul (Turkey), and Madrid (Spain) on the market values of publicly traded hospitality and tourism firms in these countries. The findings indicate that, overall, markets reacted negatively to these tragic events, but reaction in Turkey was milder than in Spain.

Its importance to and use by hotel managers

Seventy years and nine editions after its inception, this venerable resource is often misunderstood and little used by those who may need it most.

Risk Analysis for a Private Firm: A Case Study

ABSTRACT The investment decision for a firm involves a degree of risk that should be factored into that decision process. Ignoring risk analysis could result in higher costs than expected. This study looked at two methods used to calculate a beta for a private hospitality restaurant. A beta is the risk component of the Capital Asset Pricing Model (CAPM), which is a technique used to estimate the expected return on an investment. The pure-play and the analytical method were compared in estimating beta for a private firm. The two techniques resulted in different risk analysis conclusions. The analytical method appears to be a better beta estimator for a private firm.

The Impact of Face and Self-construal on SST and Interpersonal Service Orientations

The increased attention received by the widespread deployment of self-service technologies (SSTs) is well documented in the literature (Meuter et al. 2000; Collier and Kimes 2013). SSTs include technologies such as automated hotel checkouts, restaurant kiosks, ATMs, and pay-at-the-pump services. A key facet of SSTs is their ability to enhance customer co-production of services. Specifically, customers are able to direct and control their service outcomes using technological devices like kiosks/tablets, etc. Service settings often provide customers the choice of an SST and human interaction, which we term as interpersonal interaction hereafter. While the customer’s decision to choose one over the other is likely to be influenced by operational factors (potential wait times, etc.), it is also influenced by individual personality traits/characteristics (desire for control, social interaction preferences, etc.)