Seoki Lee

Financial Impacts of Socially Responsible Activities On Airline Companies

Although the concept of corporate social responsibility (CSR) has been recognized as an important ingredient for business success, the relationship between CSR and companies’ financial performance has been inconclusive and rarely examined in the airline industry. This study examines the impacts of CSR on airline companies’ financial performance in terms of accounting and value performance. In addition, the study investigates linear, quadratic, and cubic relationships between CSR and firm performance. Results show support for a positive and linear impact of CSR on value performance but not on accounting performance for airline companies. The findings can provide airline corporate executives with practical knowledge with which to strategically develop better business plans that incorporate CSR activities.

The impact of insider managerial ownership on corporate performance of Taiwanese tourist hotels.

Abstract This study examines the impact of insider managerial ownership on financial performance of publicly traded tourist hotels in Taiwan. Insider managerial shareholding (IMS) includes two different classes of owners: managers and directors (i.e., managers’ shareholding [MAS] plus directors’ shareholding [DIRS]). The indicators of financial performance under consideration are return on assets (ROA), return on equity (ROE), stock return (SR), and Tobins Q. In addition to analyzing total insider managerial ownership (IMS), the study splits IMS into two components (MAS and DIRS) and examines each of them, separately. Subsequently, panel regression tests examine the effects of IMS, MAS, and DIRS on financial performance of Taiwanese tourist hotels. Test results suggest that IMS explains ROA, ROE and Tobins Q, but not SR. Further, compared to MAS, DIRS has a more significant impact on hotel performance. Specifically, an inverted U-shape represents the effects of IMS and DIRS on hotel performance (ROA, ROE and Tobins Q), indicating that both IMS and DIRS have a significantly positive impact on hotel performance up to an optimal point (supporting the convergence-of-interests hypothesis). Further, when IMS and DIRS are greater than their corresponding optimal points, these two factors can significantly deteriorate hotel performance (supporting the entrenchment hypothesis).

Is Capital Asset Pricing Model (CAPM) the best way to estimate cost-of-equity for the lodging industry?

Purpose – The purpose of this paper is to compare traditional methods of estimating the cost‐of‐equity (capital asset pricing model and Fama and French three‐factor model) with a new approach, implied cost‐of‐equity method, to provide lodging analysts, investors, executives and researchers with a more reliable way to estimate cost‐of‐equity.Design/methodology/approach – The study uses data from publicly traded lodging firms in the USA that provide all necessary financial data for cost‐of‐equity estimation. The data range from 1976 to 2005.Findings – The study finds that the price‐to‐forward earnings (PFE), using the implied cost‐of‐equity (ICE), approach, estimates cost‐of‐equity of publicly‐traded lodging firms more reliably, compared with CAPM.Practical implications – The study recommends that lodging industry analysts, investors, executives and researchers adopt the ICE approach, especially using the PFE model, to estimate cost‐of‐equity of publicly‐traded lodging firms.Originality/value – The study at...

Developing Information Technology Proficiencies and Fluency in Hospitality Students

Students often complain that a professor or class is boring and how difficult it is to maintain focus during a typical class period, while professors and hospitality industry professionals regularly remark how ill-prepared some program graduates are to face the complex business challenges of the real world. The traditional classroom lecture does not always work because it is often tuned out by students. Thus, different teaching strategies must be considered. This article focuses on the efforts and pedagogical methods used by one professor at the University of Denvers School of Hotel, Restaurant, and Tourism Management to facilitate and improve student learning about information technology through innovative ways that push learning beyond the four-walled boundary of the traditional classroom and engage students through a variety of experiential learning activities.

Does Wall Street Truly Understand Valuation of Publicly Traded Lodging Stocks

Lodging stock undervaluation has been a long-standing issue in the industry. The proponents of lodging stock undervaluation attribute the phenomenon to Wall Streets lack of understanding of the lodging business. The opponents dismiss this claim by stating that it is unlikely that Wall Street has extensive knowledge of all industries except lodging. Therefore, the main purpose of this study is to investigate whether lodging stocks are, in fact, undervalued. The results support the notion that lodging stocks are undervalued compared to nonlodging stocks during the sample period of the 1990s. The undervaluation phenomenon may create opportunity for existing and potential lodging industry investors to take advantage of investing in a substantially undervalued portfolio. To accomplish this main goal empirically, an equity valuation model is used.

An examination of the curvilinear relationship between capital intensity and firm performance for publicly traded US hotels and restaurants

Purpose – This study sets out to examine the potential curvilinear relationship between capital intensity and firm value for the US hospitality industry, specifically including publicly traded US hotels and restaurants, during the period 1990‐2008.Design/methodology/approach – This study performs a pooled regression analysis to examine the proposed relationship. The sampled companies are from the period 1990‐2008, consisting of 281 and 1,406 observations for the hotel and restaurant industries, respectively. The study additionally performs the analysis for the 1990s and the 2000s separately for a comparison purpose.Findings – The findings support the U‐shaped relationship between capital intensity and firm performance during the 2000s for both hotels and restaurants, while no relationship exists during the 1990s.Research limitations/implications – While the results may not be generalizable to private or non‐US hotels and restaurants, the findings should provide hotel and restaurant executives and managers...

Does the Market Care About RevPAR? A Case Study of Five Large U.S. Lodging Chains:

During the past several decades, the lodging industry has used RevPAR (revenue per available room) as a key indicator to evaluate a firm’s performance and to make investment decisions. However, a limited number of research articles empirically examined whether or not RevPAR, in fact, is a valid measure for a lodging firm’s performance, especially when compared with other traditional performance measures. The purpose of the current discussion, therefore, is to compare the explanatory power of RevPAR with three traditional financial measures—earnings per share (EPS), return on assets (ROA), and return on equity (ROE)—for lodging firms’ performance, estimated by total shareholders’ returns.

Geographical diversification, risk and firm performance of US casinos.

Abstract Although geographical diversification is an emerging issue and has been considered a key competitive strategy in the casino industry, an examination of the effects of geographical diversification on casino firms’ risks and firm performances has been sparse. Thus, this study investigates the impact of the degree of geographical diversification on risk measured by the standard deviation of daily stock returns and firm performance measured by Tobins q of publicly traded US casino firms. The results of this study show the trade-off between risk and firm performance associated with the degree of geographical diversification of sampled casino firms. While geographical diversification can reduce risk, at the same time it can diminish firm performance. The findings suggest that when implementing a geographical diversification strategy, managers of casino firms need more elaborate decision making, while they need to develop devices and management capabilities to mitigate problems that deter firm performance.

Research note: Internationalization of US publicly traded restaurant companies : a transaction cost economics perspective

In the internationalization literature of economics, many theories have been applied to various issues, but transaction cost economics remains significant among other prominent theories. The original intention of transaction cost economics was to explain the nature of firms in general; however, the approach has subsequently been applied to international operations. Despite the prevalent use of the theory to explain internationalization issues, few empirical examinations have been undertaken through its application in the hospitality literature. This study therefore examines the internationalization of US publicly traded restaurant companies through transaction cost economics.

Examination of various financial risk measures for lodging firms.

Financial researchers, including those concentrating on the lodging industry, use various financial risk measures for their studies. Examples of those risk measures are beta, earnings variability, bankruptcy probability, debt-to-equity ratio and book-to-market ratio. The purpose of this study is, first, to descriptively investigate various financial risk measures used in the lodging financial literature by performing factor analysis and identifying four distinct risk groups. Second, this study examines the predictive ability of the four risk groups for lodging firm performance. The findings of this study suggest that strategic and stock performance risk factors better represent a lodging firms financial risk than do bankruptcy and firm performance risk factors, and also, ROA than ROE better estimates lodging firm performance in terms of their relationships with financial risk factors.