Hotels and restaurants—are the risks rewarded? Evidence from Norway

Skalpe, Ole

doi:10.1016/s0261-5177(03)00045-1

Cited by 29 publications

(31 citation statements)

References 46 publications

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“…The book value of leverage is the relevant measure of cash flows to the firm over which Sheel, 1994;Skalpe, 2003). Sheel (1994) examined the relation between a firm's capital structure, its cost of capital, and its stock value and found that all determinants of leverage affect capital structure decision of hospitality firms and shed light on the short-term and long-term behavior of hospitality firms as opposed to manufacturing firms.…”

Section: Theory Of Capital Structurementioning

confidence: 99%

“…The results show that small unrated firms are more likely to issue short-term debt and swap into fixed-rate debt to reduce exposure to interest rate risk. Skalpe (2003) found that the high variability in earnings is mainly caused by operational and financial leverage. He found that the market rewards risk but not risk induced by high leverage.…”

Section: Theory Of Capital Structurementioning

confidence: 99%

“…Irrespective of whether or not a company makes a profit, interest must be paid to the debt holders (Nicolau, 2005). Skalpe (2003) stated that financial leverage is an important factor in assessing the risk of a firm and its securities. Similar to his study, we also use share prices as a future-oriented measure of cash flows to the investor (Horsky & Swyngedouw, 1987;Tarras, 1991).…”

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confidence: 99%

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The Impact of Leverage on Stock Returns in the Hospitality Sector: Evidence from the UK

Muradoğlu¹,

Sivaprasad²

2014

Tourism Analysis

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a relatively low level of operating inventories, it requires a relatively high level of capital for its real estate component. This component often includes buildings, operating systems, furniture, and restaurant equipment, and this ordinarily involves securing external financing to acquire these assets.This article addresses an important question regarding the relation between leverage and its effect on stock returns of firms in the hospitality sector. The nature of the industry is important when studying the leverage return relation. Arditti (1967) and Melicher (1974) argued that the true nature of leverage return relation can be disclosed only by testing this relation within industries. The THE IMPACT OF LEVERAGE ON STOCK RETURNS IN THE HOSPITALITY SECTOR: EVIDENCE FROM THE UKYAz GŰLNUR MURADOĞLU* AND SHEEJA SIVAPRASAD † *School of Business and Management, Queen Mary University, London, UK †Department of Accounting, Finance and Governance, University of Westminster, London, UK This article examines the relation between capital structure and abnormal returns for the UK hospitality sector by using an investment strategy based on hospitality firms' capital structure. We find that abnormal returns are higher, 0.53% per annum, for medium leverage hospitality firms, and it can be increased up to 0.91% by investing in medium leverage and low price-to-book value firms. The findings raise an important issue for the hospitality sector as the firms in this sector are continually aiming to raise external finance to fund expansion. This is a unique situation when compared to other sectors in the economy whereby investors earn higher abnormal returns when investing in low levered firms.

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Section: Theory Of Capital Structurementioning

confidence: 99%

Section: Theory Of Capital Structurementioning

confidence: 99%

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confidence: 99%

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The Impact of Leverage on Stock Returns in the Hospitality Sector: Evidence from the UK

Muradoğlu¹,

Sivaprasad²

2014

Tourism Analysis

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“…Jeon et al (2004) investigated the persistence of abnormal earnings for hotels and manufacturing companies over the period of 1993-2000 and concluded that the persistence of abnormal earnings was higher for hotels than for manufacturing companies. Skalpe (2003) tested if the risks of hotels and restaurants were rewarded in Norway. He observed high earnings variation in accommodation and restaurants and noted that operational and financial leverages were major causes for high variability in earnings.…”

Section: Literature Reviewmentioning

confidence: 99%

An investigation of the mean reversion of hospitality stock prices towards their fundamental values: The case of Taiwan

Chen

Kim

Chen³

2007

International Journal of Hospitality Management

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“…The negative sign implies hotel industry's underperformance when compared to the risk-free return. According to Skalpe's (2003) empirical study, the hotel and restaurant industries involve high risk, but these industries earn less profit than any of the other industries. Part of Skaple's (2003) argument was supported in Kim and Gu's (2003) study that examined the risk-adjusted performance of three restaurant sectors in contrast with the NYSE Composite Index.…”

Section: Descriptive Resultsmentioning

confidence: 99%

Market diversification and financial performance and stability: A study of hotel companies

Lee

Jang

2007

International Journal of Hospitality Management

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Hotels and restaurants—are the risks rewarded? Evidence from Norway

Cited by 29 publications

References 46 publications

The Impact of Leverage on Stock Returns in the Hospitality Sector: Evidence from the UK

The Impact of Leverage on Stock Returns in the Hospitality Sector: Evidence from the UK

An investigation of the mean reversion of hospitality stock prices towards their fundamental values: The case of Taiwan

Market diversification and financial performance and stability: A study of hotel companies

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