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This study investigates the postmerger financial performance of acquiring firms in the lodging industry between 1985 and 2000. Jensen Measure Model and Market Model are used to examine long-term and short-term market measure of performance. Additionally, return on assets (ROA) and return on equity (ROE) are used to assess the accounting measures for the financial performance of acquiring firms. The results indicate that the shareholders of acquiring hotel companies earned no abnormal equity returns over the short term, which indicates no significant relationship between merger announcement and the change in short-term equity value. As opposed to general expectations, the study reveals that merger has a negative effect on the acquiring firms' equity values over the long term. Similarly, the ROA and ROE are found to become significantly lower after mergers. Overall, this study provides evidence that shareholders of acquiring hotel companies did not benefit from the mergers.

Franchising captures a sizeable portion of the restaurant industry and plays an important role in its growth. However, despite the importance of franchising to the restaurant industry, little has been done to investigate the characteristics of restaurant firms that engage in franchising. This study intends to explain what characteristics of restaurant firms relate to franchising. Accordingly, a logistic regression model was developed to identify variables that best differentiate restaurant franchisor firms from nonfranchisor firms. The results indicated that (a) the degree of geographic dispersion and involvement in foreign countries increases the probability of becoming a restaurant franchisor; (b) as a restaurant firm ages, the probability of franchising decreases; and (c) the decrease of specific knowledge requirements increases the probability of franchising. This study also provides suggestions to help restaurant firms considering franchising for their operations.

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