Seonghee Oak

Have budgetary controls in the US club industry changed from the mid‐1980s to the twenty‐first century?

Purpose – The purpose of this paper is to understand whether budgetary controls at clubs have changed from the mid‐1980s to the first decade of the twenty‐first century.Design/methodology/approach – The survey instrument is mailed to the members of the Club Managers Association of America. The questionnaire includes demographic data as well as information on budgetary controls.Findings – For control purposes, comparisons to the original budget and actual numbers during the current decade have increased significantly from comparisons in the prior decade. The median variance tolerance for food and labor costs has declined from the mid‐1980s to the mid‐1990s and now to the first decade of the twenty‐first century. Median variance tolerances for beverage costs are slightly higher in this study than in the mid‐1990s study.Research limitations/implications – The authors are unable to determine any statistical differences between current and prior studies due to a lack of prior data. Further research on tolerabl...

The Impact of Dividend Policy on Institutional Holdings: Hotel Reits and Non-Reit Hotel Corporations

ABSTRACT Previous research (Canina, Advani, Greenman, & Palimeri, 2001) shows that dividend initiations and dividend increases result in higher stock returns. Although institutions need to hold stocks that pay high dividends because of the prudent-man rule, recent research (Grinstein & Michaely, 2005) contradicts this practice. Since hotel REITs and non-REIT hotel corporations belong to the same industry but have different dividend policies, it is worth examining the impact of dividend policy on institutional holdings. We find institutions tend to prefer REITs. We also find institutions prefer large firms that make capital expenditures, regardless of REIT status.

The Impact of International Acquisition Announcements on the Returns of U.S. Lodging Firms

ABSTRACT The existing hospitality literature describes how global diversification in the hotel industry looks for a broader presence regardless of existing global representation. However, the finance literature reports a negative impact from global diversification because of the potentially higher cost of coordinating corporate policies. Moreover, agency problems can increase along with the size of the firm. This study measures the wealth impact of hotel global diversification on bidders at the time of international acquisition announcements. We find significant abnormal positive returns on the day of the announcement. We also find that international acquisitions have lower abnormal returns than domestic acquisitions at the time of the announcement.

How closely is CEO compensation tied to performance? An examination of the U.S. restaurant industry

ABSTRACT The purpose of this research is to assess the elasticity of CEO compensation in the U.S. restaurant industry. Using a sample of 30 restaurant firms for the years 1993 through 2006, we find that a 1 percent increase in current year firm return yields an increase of approximately .43 percent for salary bonus, and stock options, .20 percent for salary and bonus, and 2.74 percent for bonus and options. Mergers do not appear to affect CEO compensation significantly. Our findings are within the range found by many previous researchers.

Explanations for the Predominant Use of Cash Financing in Hospitality Acquisitions

ABSTRACT Seventy-five percent of hospitality acquisitions from 1980 to 2000 were cash-financed. In other industries, this figure was 43 percent. Since the choice of cash versus stock financing can have a significant effect on a hospitality acquirers capital structure, the purpose of this study was to examine possible explanations for the high level of cash financing used in hospitality acquisitions. The results indicate that in both the hotel and restaurant industries, the use of cash payments in acquisitions is positively related to the acquiring firms debt ratio. Firm size is also positively related to the use of cash payments, but only in the restaurant industry. Free cash flow and internal growth opportunities do not appear to be significant determinants of the use of cash payments in acquisitions in the hospitality industry.

Evidence for Weak-Form Market Efficiency in Hotel Real Estate Markets

The purpose of this study is to test for evidence of weak-form market efficiency in hotel real estate markets by measuring how rapidly price changes diffuse in geographically proximal areas. Using autocorrelation and cross-correlation analysis, we found that there is little evidence that past hotel prices predict future hotel prices in the same city as well as neigh- boring cities. In addition, buy-and-sell trading strategies based on the information in past hotel prices did not earn higher returns than buy-and-hold strategies. The results of this study are supportive of the existence of weak-form market efficiency in the pricing of hotel real estate.

Information Asymmetry Around Hospitality Merger Announcements

ABSTRACT The purpose of this study is to examine the effect of information asymmetry on insider trading activities in hospitality firms. In particular, this study will use a market micro structure approach to detect insider trading activities of hospitality firms prior to merger announcements. Since the payment type of a merger is determined by private managerial information, it can act as a proxy of information asymmetry. Depending on the payment type of a merger, insiders may make different transactions with their private share holdings before the merger announcement. Insider selling (buying) activities may forecast their firms negative (positive) abnormal performance after mergers.

Why Do Restaurant Firms Initiate Dividends

ABSTRACT The U.S restaurant industry has experienced strong growth since 1970 (National Restaurant Association, n.d.). Publicly traded restaurant firms tend to initiate dividends soon after they go public, quite often even in the same year. This study tests hypotheses based upon four dividend initiation theories: signaling, life-cycle, agency costs and catering. The results reveal that only the signaling theory is significant. Since most restaurant firms initiate dividends at the growth stage, they tend to have little free cash flow, high investment opportunities, and low dividend premiums (which are less favorable to investors).

Institutional Investors and International Diversification in the U.S. Restaurant Industry

ABSTRACT Although U.S. restaurant firms face high risks in diversifying their operations internationally, there are no previous studies that motivate international diversification. If international diversification is risky, then why do restaurant firms go abroad? This study focuses on one potential explanation, namely the institutional investor ownership, to determine if it can explain the internationalization behavior in the restaurant industry. According to previous research, ownership by pressure-sensitive groups (bank and insurance firms) is negatively related to international diversification and ownership by pressure-resistant groups (pension funds, mutual funds, and brokerage firms) is positively related to international diversification. The results for restaurant firms reported in this study partially confirm previous findings. While pension and mutual fund firms support international diversification, pressure from investments by banking firms leads to lower international diversification. Investments from insurance firms are not related to international diversification, and investments by brokerage firms are negatively related to internationalization.

Institutional Investor Preference For lodging Stocks

ABSTRACT Although previous studies showed evidence of increasing institutional investors in the lodging industry (Corgel & DeRoos 1994, 2003; Leung & Lee, 2005; Ciochett et al., 2002), no empirical study has reported the determinant of institutions preference for lodging stocks. Since institutions act as agents for other investors, their investment patterns may be different from individual investors. In the case of litigation, the court accepts an institutions prudent investment based on the characteristics of assets in isolation. Thus, institutions will prefer lodging stocks with high liquidity, low book-to-market ratios, low long-term debt ratios, and high short-term debt.