The relationship between a firm's capital structure, its cost of capital, and its
stock value is an important financial and investment issue today. Using a cross-
sectional regression analysis, the leverage behavior of 33 firms in 2 industry
groups-the hotel industry and the manufacturing sector-was examined. Findings
showed that all leverage determinants studied, excepting firm size, are significant in
explaining leverage variations in debt behavior. In addition, although more industry-
specific variables are needed, leverage behavior in hotel firms can be analyzed using
traditionally theorized capital structure determinants. As such, the capital structure in the hotel industry is better understood, and some important distinctions between
short-term and long-term debt behavior in hotel and manufacturing firms are
revealed.
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