Several motivations have been offered for the use of preferred stock to raise capital. Reasons offered include financial reporting motivations, an increased probability of financial distress of the issuing firm, a low or zero percent marginal tax rate of the issuing firm, and the high marginal tax rate of investing firms. We tested financial distress theory using five financial ratios for preferred stock issuers and the weighted average of non-issuing firms (control group) for a sample of hospitality firms issuing preferred stock between 1980 and 2012. The results show debt ratio of issuers are significantly higher than nonissuers and retained earnings to total assets, times interest earned, net profit margin and return on assets ratios are significantly lower than non-issuers which is consistent with the financial distress explanation as well as other explanations of preferred stock use including financial reporting motivation, and low tax rate motivation. This supports the proposition that hospitality preferred stock issuers have higher financial distress than non-issuers.

The restaurant industry has expanded into international markets remarkably well due to various benefits. However, there are also high risks involved in internationalization and it is important to consider the internationalization strategy from the risk perspective for the restaurant industry. The current study attempts to examine the relationship between restaurant firms' internationalization and accounting-based risk. This study analyzes data from U.S. restaurant firms by estimating accounting-based risk measured by the standard deviation of return on assets (ROA), and performing a Two-Way Fixed-Effects Model. The findings of this study reveal that although internationalization shows a curvilinear relationship (i.e., concave downward) with ROA risk, the major shape of the relationship may be more linear rather than curvilinear, partially explained by organizational learning theory. Restaurant firms might initially face challenges caused by inexperience in international operations in conjunction with an unfamiliar culture and may not immediately realize the risk-reduction effects. Thus restaurant executives involved in new international operations need to be very informed on risk management. This allows them to gain more confidence in pursuing internationalization strategies and ultimately enjoy the risk-reduction effects, acknowledging that more international operations can reduce restaurant firms' ROA risk in the long run. This finding provides important insights for international restaurant companies to better understand how their implementation of internationalization strategy may contribute to their firms' accounting risks.

The current dual-lease accounting model that requires a lessee to report capital (or finance) but not operating leases on its balance sheet has long been denounced because it does not always present an accurate and transparent accounting of lease transactions and obligations even though both leases are legally binding contracts that require scheduled payments. These amounts are not trivial as a recent study showed that in 2015 the total undiscounted, operating lease payments amounted to roughly $66 billion for North American, publicly-traded, hospitality companies. Finally, the use of off-balance sheet or operating leases is coming to an end as new lease accounting standards, U.S. Financial Accounting Standards Board’s Accounting Standards Update (ASU) 842 and International Financial Reporting Board’s Financial Reporting Board Standards (IFRS) 16, will be effective respectively December 15, 2018 and January 1, 2019. Astonishingly, given the fast-approaching deadlines, a recent survey found that almost 80% of the 3,850 respondents said they are not prepared to comply with new standards. The main purpose of this research proposal is to survey the hospitality companies on their preparedness for the new lease accounting standards.The implications are far reaching because non-compliance with either the U.S. GAAP or the IFRS will result in dire consequences. In addition, the survey will also shed light on other issues related to the new standard implementation such as challenges, training, expected impact on financial statements and ratios, and expected effect on debt covenants. Furthermore, we will recommend critical procedures for those unprepared hospitality companies to implement the new standards in a timely and effective manner.

The gaming industry experienced numerous merger and acquisition (M&A) activities in the 1990s. This study examines the cumulative abnormal returns (CARs) for gaming target and bidding firms around the announcement of mergers and acquisitions (M&As) from 1985 to 2004. The results showed that both targets and bidders had significant positive returns. The study finds that gaming targets enjoy significant positive returns consistent with the literature. Gaming industry bidders earn significant, positive returns. The literature on bidder returns shows mixed results; some were positive, some were negative but many are not significantly different from zero. The positive bidder returns in the gaming industry found here are possibly caused by the high entry barriers to the gaming industry such as acquiring gaming licenses, familiarity of gaming regulations, and experience. It is generally much more difficult for a non-gaming bidder than a gaming bidder to acquire gaming industry targets. As a result, there is usually much less competition in gaming industry M&As than for other industries. This is likely a major cause of the higher returns for gaming bidders than found for bidders in most other industries.

Purpose - This study aims to empirically investigate agency and stewardship theories in the US lodging market by examining the influence of fiscal and non-fiscal leadership structures on the debt financing decisions of lodging firms. Design/methodology/approach - Secondary financial data have been collected for USA-based lodging firms. Subsequently, bivariate correlation, pooled ordinary least square and endogeneity analyses have been performed on the data. Findings - The findings support the significant influence of some corporate governance attributes on the capital structure of US lodging firms and show the limited applicability of agency and stewardship theories. Practical implications - Theoretical and managerial implications are suggested in terms of balancing leadership structure attributes from the agency and stewardship theories, the capital structure of lodging firms and the future research. Originality/value - Despite its importance considering the intensive capital and relatively high liabilities needed for success in the lodging industry, the influence of leadership structure on capital structure has not been examined either empirically or theoretically. Leadership structure attributes, both fiscal and non-fiscal, are included in the study to gain a richer understanding of their influence. The outcomes of the analysis suggest managerial implications for leadership structure as well as theoretical generalizability for agency and stewardship theories within the lodging industry.

The days where companies can use off-balance sheet leases are coming to an end. The new lease accounting standards, ASU 842 and IFRS 16, released in early 2016, will be effective, respectively, on December 15, 2018, and January 1, 2019. Under the new standards, virtually all leases will be recognized on a lessee’s balance sheet. Hence, financial statements and ratios of companies that heavily use off-balance sheet leases will be considerably impacted. Our analysis of the off-balance sheet leases by the hospitality industry indicates that hospitality companies do extensively use these operating leases, which amounted to 51% of their assets in 2015. The expected widespread unfavorable impact on a lessee’s debt ratios and interest coverages could also affect a hospitality company’s borrowing rates and debt covenants. Given that the implementation is most likely time consuming, not just costly, the earlier the hospitality companies are prepared for the new standards the better.

This study explores the influence of fiscal (insider incentives and blockholder) and nonfiscal (CEO duality and tenure, board size, and outside directors) leadership attributes on the capital structure of the U.S. lodging firms based on the comparison of agency and stewardship theories. Specifically, in terms of agency theory, the current study hypothesizes a significant influence of fiscal leadership attributes (insider incentive and blockholder), board size, and outside directors on financial leverage. In terms of stewardship theory, this study hypothesizes a nonsignificant influence of fiscal leadership attributes, and CEO duality and tenure having a significant influence on financial leverage. The findings support the significant influence of some fiscal and non-fiscal leadership attributes on capital structure among U.S. lodging firms. Theoretical and managerial implications are suggested in terms of balancing some of the leadership attributes from agency and stewardship theories; the capital structure of lodging firms; and future research.

ABSTRACT This is the first study to consider the impact of payment method on announcement period returns in response to a merger and acquisition in the hospitality industry. Much research has been published on the returns to mergers and acquisitions generally, and, in the last ten years, quite a bit has been published on this topic in hospitality journals. But very little has been published about the impact of payment method in hospitality mergers and acquisitions. This paper uses standard event study methodology to determine abnormal returns for a sample of 282 bidding hospitality firms. The results are that an acquisition in the hospitality industry is more likely to be profitable if payment is made with cash. This provides empirical support for the asymmetric information and signaling theories premise that bidding firms will earn positive abnormal returns for cash offers, but returns are not significantly different than zero for stock offers.

Growth in the tourism and hospitality industry caused a tremendous increase in the number and type of tourism and hospitality programs at two and four year colleges in the United States. This study identified factors that influence students' choices among in-state, out-of-state, and international students. The study utilized exploratory factor analysis to identify appropriate factors and multivariate analysis of variance to determine differences in college choice among the three groups. The results of this research are beneficial to colleges in the development of appropriate promotions to differentiate themselves in a meaningful way to potential students, not just in the United States but internationally.

The final disposition of assets at the conclusion of joint venture arrangements is important to an understanding of the motivation to pursue a joint venture and the wealth created by these collaborations. A comparison between conventional asset sales and asset sales occurring within a joint venture structure shows that the total wealth created is larger if the assets have been under shared control in a joint venture. Our results support the contention that the establishment of a joint venture creates an opportunity for a relationship-based exchange of information that can serve as a mechanism to transfer assets in the presence of a high degree of asymmetric information.

(Note: Each chapter begins with an Introduction and concludes with a Summary, Glossary, Vignette, and Questions and Problems section.) 1. Introduction. The Relationship of Financial Management to Other Functional Areas of Management. Organization of the Firm. A Basic Understanding of Financial Management. Wealth Maximization. A General Outline of the Textbook. 2. Financial Markets and Financial Instruments. Why People Invest. Capital Markets. Money Market. Raising Financial Capital and Security Trading. Financial Markets and Hedging Risk. Key Financial Intermediaries: Lenders to the Hospitality Industry. Stock Market Performance. 3. Review of Financial Statements and Selected Ratios. Review of the Income Statement. Review of the Balance Sheet. Relationship Between the Income Statement and the Balance Sheet. Statement of Retained Earnings. Statement of Cash Flows. Validity of Financial Statements. Ratio Analysis. Perspectives on and Limitations of Ratio Analysis. 4. The Relationship Between Risk and Return. How Typical Investors Feel About Risk. Returns and Distributions. Diversification. The Market Portfolio. The Market Portfolio and Beta. Beta, Expected Return and the Security Market Line. 5. Time Value of Money. Future Value-Compounding. Present Value-Discounting. Future Value of an Annuity. Present Value of an Annuity. Perpetuity-An Infinite Annuity. Present Value of a Series of Non-Constant Cash Flows. Compounding Periods Other Than Annual. Effective Annual Rates. Amortized Loans. 6. Fixed Income Securities: Bonds & Preferred Stock. Basic Bond Terminology. Bond Features. Bond Ratings. Valuing Corporate Bonds. Computing Yield to Maturity on Corporate Bonds. Bonds with Semi-Annual Coupon Payments. Basic Preferred Stock Terminology. Preferred Stock Features. Valuing Preferred Stock. 7. Common Stock. Common Stock Features. Valuing Common Stock. General Dividend Valuation Model. Zero-Growth Dividend Valuation Model. Constant-Growth Dividend Valuation Model. Valuing Common Stock with Multiple Growth Rates. Common Stock Value, Investors Rate of Return and Growth. 8. Cost of Capital. The Weighted Average Cost of Capital. Estimating the Cost of Capital Components. The Cost of Debt. The Cost of Preferred Stock. Internal Common Equity-New Retained Earnings. Dividend Valuation Model Method for Estimating the Cost of Internal Equity. The Bond Yield Plus Risk Premium Method for Estimating the Cost of Internal Equity. External Common Equity-New Issues of Common Stock. Computation of the Weighted Average Cost of Capital. Using the Weighted Average Cost of Capital. 9. Introduction to Capital Budgeting and Cash Flow Estimation. Classifying Capital Budgeting Projects. The Captial Budgeting Decision and Cash Flow Estimation. 10. Capital Budgeting Decision Methods. Captial Budgeting Decision Methods. Independent Projects and Capital Budgeting Decision Methods. Mutually Exclusive Projects and Capital Budgeting. Not Normal Cash Flows. The Use of Captial Budgeting Decision Methods. 11. An Introduction to Hotel Valuation. Reasons for a Hotel Appraisal. The Hotel Appraisal Process. Approaches to Value. A Rule of Thumb Approach and Revenue Multipliers. Final Reconciliation of Value. 12. Capital Structure. Financial Risk. Business Risk. Capital Structure Theory. Other Significant Factors in the Determination of a Firms Capital Structure.

ABSTRACT This paper examines the question of whether there are systematic differences in the cost of debt relative to rating standards between firms in the hospitality industry and firms in other industries. It also examines the impact of make-whole call provisions on the cost of debt. The make-whole call provision is a relatively recent innovation in the corporate bond market. We do find some evidence of a positive hospitality industry impact on bond yields. Additionally, the make-whole call provision appears to be valued by investors, reducing the investor loss from early bond redemption in a period of declining interest rates.

AbstractThis paper integrates research on the accuracy of alternative long‐term earnings forecasts, the gain in accuracy achievable from combining various forecasts, and the power of different long‐term earnings forecasts to explain stock prices. The tests are performed on 82 electric utility firms because of the relative homogeneity of accounting data in that industry and because of the importance of the findings for the determination of the cost of capital in a regulatory proceeding. The results are consistent with earlier research findings that analyst forecasts of long‐term earnings growth are more accurate than forecasts from extrapolative models. Combined forecasts applied to out‐of‐sample data, however, did not result in markedly improved forecasting accuracy. Finally, valuation tests of alternative forecasting techniques offered strong evidence that investors place the greatest weight on forecasts from Value Line.

Valuation analysis, security selection, and cost of capital estimation techniques are dependent on long-term earnings forecasts. This study focuses on the accuracy of long-term earnings forecasting models, specifically comparing the accuracy of Value Line analysts' versus mechanical forecasts. Analysts are expected to be more accurate than mechanical methods because analysts can incorporate more information. Also, analysts should not be in demand if they did not provide information that was not readily available from extrapolative forecasts. The empirical evidence from this study tends to support the superiority of Value Line analysts' long-term earnings forecasts to various extrapolative forecasting models.

This paper explores the determinants of monitoring activity provided by security analysts. Jensen and Meckling have argued that analysts play the role of monitors of managerial performance as a means of reducing agency costs of debt and equity. The other major role analysts play is that of making security markets more informationally efficient. The empirical results reported in this paper support the role of analyst monitoring as an efficient device for controlling agency-related costs of debt and equity and as a response to the information demands of investors.

Nonconvertible preferred stock does not play a major role in the financing of most corporations, with the exception of public utilities. Donaldson (1962) hypothesized that nonconvertible preferred stock will be issued primarily by industrial (non-utility) firms facing financial difficulties. This article investigates this hypothesis. Our results support the financial-distress hypothesis and indicate that industrial issuers of nonconvertible preferred stock have a lower relative market value, a lower interest coverage ratio, a lower level of retained earnings, and a lower equity ratio than do non-issuers.

Financial ReviewVolume 22, Issue 3 p. 29-29 AGENCY ASPECTS OF PUT BONDS Robert E. Chatfield, Robert E. Chatfield Texas Tech UniversitySearch for more papers by this authorR. Charles Moyer, R. Charles Moyer Texas Tech UniversitySearch for more papers by this author Robert E. Chatfield, Robert E. Chatfield Texas Tech UniversitySearch for more papers by this authorR. Charles Moyer, R. Charles Moyer Texas Tech UniversitySearch for more papers by this author First published: August 1987 https://doi.org/10.1111/j.1540-6288.1987.tb01163.xAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinkedInRedditWechat No abstract is available for this article. Volume22, Issue3August 1987Pages 29-29 RelatedInformation