Financial researchers, including those concentrating on the lodging industry, use various financial risk measures for their studies. Examples of those risk measures are beta, earnings variability, bankruptcy probability, debt-to-equity ratio and book-to-market ratio. The purpose of this study is, first, to descriptively investigate various financial risk measures used in the lodging financial literature by performing factor analysis and identifying four distinct risk groups. Second, this study examines the predictive ability of the four risk groups for lodging firm performance. The findings of this study suggest that strategic and stock performance risk factors better represent a lodging firm's financial risk than do bankruptcy and firm performance risk factors, and also, ROA than ROE better estimates lodging firm performance in terms of their relationships with financial risk factors.
Begley, J., Ming, J., & Watts, S. (1996). Bankruptcy classification errors in the 1980s: An empirical analysis of Altman's and Ohlson's models. Review of Accounting Studies, 1(4), 267-284.
2.
Berk, J.B. (1995). A critique of size-related anomalies. Review of Financial Studies, 8(2), 275-286.
3.
Black, F. (1972). Capital market equilibrium with restricted borrowing . Journal of Business, 45(3), 444-455.
4.
Bowman, E.H. (1980). A risk/return paradox for strategic management . Sloan Management Review, 21(3), 17-31.
Chathoth, P.K., & Olsen, M.D. (2007). The effect of environment risk, corporate strategy, and capital structure on firm performance: An empirical investigation of restaurant firms. International Journal of Hospitality Management, 26(3), 502-516.
Dalbor, M., & Upneja, A. (2002). Factors affecting the long-term debt decision of restaurant firms. Journal of Hospitality and Tourism Research , 26(4), 422-434.
9.
Dalbor, M., & Upneja, A. (2004). The investment opportunity set and the long-term debt decision of U.S. lodging firms. Journal of Hospitality and Tourism Research, 28(3), 346-355.
10.
Fama, E., & French, K.R. (1992). The cross-section of expected stock returns. Journal of Finance, 47(2), 427-465.
11.
Fiegenbaum, A., & Thomas, H. (1985). An examination of the structural stability of Bowman's risk-return paradox. Academy of Management Proceeding , 12, 7-10.
12.
Fiegenbaum, A., & Thomas, H. (1986). Dynamic and risk measurement perspectives on Bowmans' risk-return paradox for strategic management: An empirical study. Strategic Management Journal, 7(5), 395-408.
13.
Fiegenbaum, A., & Thomas, H. (1988). Attitudes toward risk and the risk-return paradox: Prospect theory explanations. Academy of Management Journal , 31(1), 85-106.
14.
Gode, D., & Mohanram, P. (2003). Inferring the cost of capital using the Ohlson-Juettner model. Review of Accounting Studies, 8(4), 399-431.
15.
Gu, Z., & Choi, Y. (2004). CEO compensation determinants in the casino industry . Journal of Hospitality and Tourism Research, 28(2), 143-155.
16.
Gu, Z., & Kim, H. (2003). An examination of the determinants of hotel REITs' unsystematic risk. Journal of Hospitality and Tourism Research , 27(2), 166-184.
17.
Hair, J., Anderson, R., Tatham, R., & Black, W. (1998). Multivariate data analysis. Upper Saddle River, NJ: Prentice Hall.
18.
Hillegeist, S.A., Keating, E.K., Cram, D.P., & Lundstedt, K.G. (2004). Assessing the probability of bankruptcy. Review of Accounting Studies, 9(1), 5-34.
19.
Jang, S., & Yu, L. (2002). Analysis of return on hotel investment: A comparison of commercial hotel companies and casino hotel companies. Journal of Hospitality and Tourism Research, 26(1), 38-53.
20.
Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decisions under risk. Econometrica, 47(2), 262-291.
21.
Keiser, J. (2002). Boards of directors of the hospitality and tourism industries: An exploratory analysis of composition and interlocks. Journal of Hospitality and Tourism Research, 26(2), 155-174.
22.
Kim, H., & Gu, Z. (2004). Financial determinants of firm bond ratings: An examination of hotel and casino firms. Journal of Hospitality and Tourism Research, 28(1), 95-108.
23.
Kim, H., Gu, Z., & Mattila, A. (2002). Hotel real estate investment trusts' risk features and beta determinants. Journal of Hospitality and Tourism Research, 26(2), 138-154.
24.
Kwansa, F., & Cho, M. (1995). Bankruptcy cost and capital structure: The significance of indirect cost. International Journal of Hospitality Management , 14(3-4), 339-350.
25.
Lee, S., & Upneja, A. (2007). Does Wall Street truly understand valuation of publicly traded lodging stocks? Journal of Hospitality and Tourism Research, 31(2), 168-181.
26.
Lintner, J. (1965). The valuation of risk assets and the selection of risky investments in stock portfolios and capital budgets. Review of Economics and Statistics, 47(1), 13-37.
27.
Malkiel, B.G., & Xu, Y. (1997). Risk and return revisited. Journal of Portfolio Management, 23(3), 9-14.
28.
Miller, K.D., & Bromiley, P. (1990). Strategic risk and firm performance: An analysis of alternative risk measures. The Academy of Management Journal , 33(4), 756-779.
29.
Ohlson, J. (1980). Financial ratios and the probabilistic prediction of bankruptcy. Journal of Accounting Research, 19(1), 109-131.
30.
Shapiro, A.G., & Titman, S. (1986). An integrated approach to corporate risk management . In J. M. Stern & D. H. Y. Chew (Eds.), The revolution in corporate finance (pp. 215-229). Oxford, UK: Blackwell.
31.
Sharpe, W.F. (1964). Capital asset prices: A theory of market equilibrium under conditions of risk. Journal of Finance, 19(3), 425-442.
32.
Sheel, A. (1994). Determinants of capital structure choice and empirics on leverage behavior: A comparative analysis of hotel and manufacturing firms . Hospitality Research Journal, 17(3), 3-16.
33.
Singh, J.V. (1986). Performance, slack, and risk taking in organizational decision making. Academy of Management Journal, 29(3), 562-585.
34.
Tang, C., & Jang, S. (2007). Revisit to the determinants of capital structure: A comparison between lodging firms and software firms. International Journal of Hospitality Management. 26(1), 175-187.
35.
Walls, M.R., & Dyer, J.S. (1996). Risk propensity and firm performance: A study of the petroleum exploration industry. Management Science , 42(7), 1004-1021.
