An examination of capital structure in the restaurant industry

Abstract

The purpose of this paper is to examine the capital structure decisions of restaurant firms. The paper hypothesizes that these decisions are based upon a financial "pecking order" as well as the position of the firm in the financial growth cycle. Using ratios from publicly traded restaurant firms in the U.S. and ordinary least squares regression models, the results tend to support the notion that both the pecking order and the financial growth cycle influence financing decisions. However, the results also indicate that there may be separate factors affecting long-term and short-term debt decisions made by restaurant managers.

An Exploration of the Debt Ratio of Ski Lift Operators

“…Older companies often have a better reputation, and information asymmetries between lenders and borrowers are likely to be lower. For the restaurant industry, the literature shows that older restaurants exhibit a significantly higher debt ratio [19]. In contrast, Dalbor et al [50] find no significant relationship.…”

“…The trade-off theory predicts a positive relationship between the share of fixed assets and the debt ratio. Most studies for hotels find a positive association between the share of fixed assets and the debt ratio [11,19]. However, this relationship is less relevant in the ski lift industry because all companies have an extremely high proportion of fixed assets.…”

“…This debt ratio is similar to the ratio of total debts to total assets (sum of total liabilities and total equity), which is commonly used in the hospitality literature [19,49]. As the market value of equity is available only for listed firms, the book value of equity is often used for privately owned companies.…”

“…As mentioned above, hospitality literature shows that the debt ratio depends on various factors [6,7,[9][10][11][12][13][14][15][16][17][18][19][20], a significant one being growth opportunities. However, the hospitality literature is not clear-cut.…”

Machine Learning Methods of Bankruptcy Prediction Using Accounting Ratios

“…Similar to the experiments, a great number of generalized liner models that can be used to predict financial conditions emerged continuously (e.g. Aziz, Emanuel and Lawson (1988) [8]; Koh (2010) [9]; Platt, Platt and Pederson (1994) [10]; Upneja and Dalbor (2000) [11];…”