Moderating effect of capital intensity on the relationship between leverage and financial distress in the U.S. restaurant industry

Lee, Seoki; Koh, Yoon; Kang, Kyung Ho

doi:10.1016/j.ijhm.2010.11.002

Cited by 45 publications

(61 citation statements)

References 64 publications

(91 reference statements)

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“…Sedangkan menurut Ehrhardt dan Brigham (2016:524) dalam (Nelmida dan Siregar, 2016) dengan Capital Intensity Ratio (CIR) yang relatif tinggi akan sangat membutuhkan sejumlah besar aset untuk menghasilkan tambahan penjualan, dan dengan demikian akan membutuhkan pembiayaan eksternal yang lebih besar. Lee, et al (2011) menyatakan bahwa ada perspektif lain dari intensitas modal yang menunjukkan jika intensitas modal memiliki peran penting dalam menurunkan tingkat kesulitan keuangan. Karena perusahaan padat modal akan dapat mempertahankan proporsi yang lebih besar dari aset tetap dibandingkan dengan perusahaan yang lain, sehingga aset tetap ini dapat dijadikan sebagai agunan untuk mengurangi terjadinya tingkat kesulitan keuangan.…”

Section: Intensitas Modalunclassified

Financial Distress Predicted by Cash Flow and Leverage With Capital Intensity as Moderating

Bernardin¹,

Tifani²

2019

JAE

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The level of financial distress is a condition where the company's finances are in an unhealthy state or crisis. This study aims to examine the effect of cash flow and leverage in predicting the level of financial distress which is moderated by capital intensity at PT. Indah Karya (Persero). The research method used is descriptive verification with a quantitative approach. To assess this research, the 2013-2017 Quarterly Financial Report is used. The results showed that cash flows has a negative and significant influence in predicting the level of financial distress, leverage (debt to asset ratio) has a positive and insignificant influence in predicting the level of financial distress, capital intensity has a negative and insignificant effect in moderating the effect of cash flows on the level of financial difficulty and capital intensity has a positive and insignificant influence in moderating the influence of leverage in predicting the level of financial distress. Simultaneously cash flow and leverage in predicting the level of financial distress which is moderated by capital intensity together - have a significant effect on the condition of the level of financial distress of PT. Indah Karya (Persero). Another result found in this study is that the capital intensity variable in moderating leverage has the strongest influence in predicting the level of corporate financial distress which is seen by using an assessment of total assets to sales and debt to asset ratio. With these results, the company can use it as an early detection in the face of financial distress. Keywords: CashFlow, Leverage, Capital Intensity, Financial distress

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Section: Intensitas Modalunclassified

Financial Distress Predicted by Cash Flow and Leverage With Capital Intensity as Moderating

Bernardin¹,

Tifani²

2019

JAE

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“…Firms with higher capital intensity have lower risk of default and achieve higher credit ratings (Ashbaugh-Skaife et al, 2006). Also, on the basis of the cost reduction argument, high capital intensity hospitality firms may reduce the level of operating costs and collateral (Lee, Koh, & Kang, 2011;Sheel, 1994).…”

Section: Operational Characteristics (Firm Performance)mentioning

confidence: 99%

Corporate Governance, Ownership Structure, and Credit Ratings of Hospitality Firms

Altin

Kizildag

Özdemir

2016

The Journal of Hospitality Financial Management

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This study examines interrelated connections of corporate governance, ownership structure, and credit ratings. From the agency relationship perspective, the study analyzes this multiple association by accounting for firm-specific and ownership characteristics for the period between 1990 and 2007. In this context, logistic functions are used in regression models to predict the probable outcomes of these multiple relationships. Primary findings of this study revealed that hospitality firms with higher anti-takeover provisions (less shareholder power) enjoy higher credit ratings. Findings also revealed high coefficients of Gompers, Ishii, and Metrick (2003) index (the GIM index), suggesting that hospitality firms have strong governance provisions, reduced agency conflicts, and higher chances of getting better credit ratings.

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“…However, financial distress positively significantly affects financial leverage when an industry in the financial distress issues debts to get rid of financial distress. Lee, Koh, and Kang (2011) showed that financial distress positively and significantly affects leverage.…”

Section: Financial Distressmentioning

confidence: 99%

Determinants of Corporate Capital Structure: A Theoretical Integration and Some Empirical Evidences

Uddin¹

2015

IJEF

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This research reviews all of the relevant important theories and concepts developed in corporate capital structure until till date in an aggregate manner. The empirical part of the study reveals that the leverage ratios defined in short-term debts, long-term debts, total debts and book value of assets are correlated. Similarly, the leverage ratios defined in short-term debts, long-term debts, total debts and market value of assets are correlated. However, book value based and market value based leverage ratios are not correlated. The leverage ratios defined in earnings before interest and taxes over interest and earnings before interest, taxes and depreciation over interest are positively perfectly correlated. Besides, short-term loans are three times more compare to long term debts, firms are reluctant in paying tax and allotment in research and development expenses are insufficient. In addition, industry median average, non-debts tax shield, uniqueness (R&D) positively significantly affects financial leverage and, and size, tangibility, tax rate, dividend pay-out, agency cost, business risk, GDP growth, and money growth negatively significantly affects financial leverage. The selling, general and administrative expenses positively affects short-term debts, negatively affects long-term debts and have no significant effects on total debts. Last but not least, human capital cost do not have affect on any kind of leverage.

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Moderating effect of capital intensity on the relationship between leverage and financial distress in the U.S. restaurant industry

Cited by 45 publications

References 64 publications

Financial Distress Predicted by Cash Flow and Leverage With Capital Intensity as Moderating

Financial Distress Predicted by Cash Flow and Leverage With Capital Intensity as Moderating

Corporate Governance, Ownership Structure, and Credit Ratings of Hospitality Firms

Determinants of Corporate Capital Structure: A Theoretical Integration and Some Empirical Evidences

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