Examining Ownership Equity as a Psychological Factor on Tourism Business Failure Forecasting

Abstract

This paper examines ownership equity as a predictor of future business failure within the tourism and hospitality sectors. The main goals of this study were to examine which ratios are the most important for a tourism business failure forecasting model and how significant is the "total percentage of equity ownership by company directors" ratio compared with other ratios associated with the probability of bankruptcy. A stepwise weight assessment ratio analysis (SWARA) was applied, and 12 tourism bankruptcy experts evaluated key ratios. Total percentage of equity ownership by company directors is considered a psychological factor, and it was identified as the fourth most important ratio for a business failure forecasting model. Academicians and practitioners can use the findings of this study whenever developing a forecasting model for tourism and hospitality enterprises.

Resident’s Perspective on Developing Community-Based Tourism – A Qualitative Study of Muen Ngoen Kong Community, Chiang Mai, Thailand

“…It is argued that, because management in the tourism industry field sometimes requires immediate decisions (Murphy, 1985), it is difficult to ensure that all voices are represented in the decision-making process (Nault and Stapleton, 2011). However, using forecasting models can address and ease strategic and urgent decision-making because it can assess weakness in order to minimize any risks (Korol and Spyridou, 2020).…”

“…Scheyvens ( Scheyvens, 2002 ), identified that inadequate resources, information, and consultation to make an effective engagement with stakeholders can lead to vulnerability in tourism. Financial risks are always an initially significant factor for business success or failure in communities ( Korol and Spyridou, 2020 ). When finance is unavailable at a local level, communities will lose their own control of resources to outside enterprises ( Scheyvens, 2002 ).…”

“…When finance is unavailable at a local level, communities will lose their own control of resources to outside enterprises ( Scheyvens, 2002 ). It is noted that in order to anticipate the vulnerabilities and prepare backup plans, a financial warning system is essential for business ( Korol and Spyridou, 2020 ).…”

Analysis of the Validity of Financial Failure Predicting Models: The Case of Thomas Cook

“…Borodin, Pyatanova ve Yashin (2019), iflas etmiş 5 havayolu işletmesinin finansal verileri üzerinde Bayes regresyon analizini uygulayarak net gelir, likidite oranı, doluluk oranı ve aktif devir hızı gibi oranların finansal başarısızlık riskini %90'a kadar doğru tahminde bulunduğu sonucuna ulaşmışlardır. Korol ve Spyridou (2020), turizm sektöründeki finansal başarısızlığı tahmin edebilmek için hangi oranların önemli olduğunu Swara analizi ile incelemişler ve işletme sermayesi/toplam varlıklar, dağıtılmamış kârlar/toplam varlıklar ve faiz ve vergi öncesi kar/toplam varlıklar oranlarının en önemli oranlar olduğunu belirlemişlerdir.…”

Bankruptcy Prediction: The Case of the Greek Market

“…As it is natural, when there is an intense crisis in an area, corporate companies tend to go bankrupt more easily as the instability problems increase, and liquidity difficulties usually arise [2]. Although there is a plethora of studies that are trying to explain business failure for different countries under normal circumstances, there are limited studies that focus on the company's business failure for a country under crisis [3]. Business failure can be described in different ways, since it mainly depends on the specific condition the company deals with, during a specific period.…”