Search results

The primary purpose of this study is to identify the drivers of the annual growth for publicly traded restaurant firms in the USA.

Built on previous research, the study constructs an econometric model to systematically investigate growth drivers of the restaurant industry using data from publicly traded restaurant firms in the USA.

Annual changes in size and market share were found to be positively and significantly related to restaurants' one‐year ahead annual growth. In addition, the annual change of leverage is negatively and significantly related to this growth. However, annual changes in book to market, market risk premium, as well as earnings growth fail to exhibit significance, controlling for franchising, internationalization, and year effects.

Results may not be directly generalizable to all restaurant firms at large, considering that the sample is drawn from only publicly traded restaurant firms. In addition, there may be certain variables that the study did not directly observe but which influence firms' growth. Exploring a combination of both financial and nonfinancial variables may shed more light on the growth issue, especially with a more comprehensive data set.

The paper recommends that restaurant executives should focus on market share, size, leverage, and franchise to improve the annual sales growth for the following year in addition to market risk premium.

The study attempts to provide, for the first time, systematic financial evidence about growth drivers of the restaurant industry employing representative secondary data from publicly traded restaurant firms. Understanding the driving forces behind the growth of the restaurant firms is of great importance to investors, financial analysts and management.

The purpose of this study is twofold: to investigate the relationship between restaurant firms’ internationalization and systematic risk, and to further examine the relationship between internationalization and systematic risk based on the type of restaurant firm (i.e. limited-service vs full-service restaurants).

This study analyzes data from US-based publicly traded restaurant firms by estimating systematic risk based on the Carhart four-factor model and by performing a two-way random-effects model.

Findings support not only the risk-reduction effect of internationalization on systematic risk but also the moderating effect of the role of restaurant type on the relationship between internationalization and systematic risk. More specifically, the risk-reduction effect of internationalization on systematic risk is greater for limited-service than full-service restaurants.

The findings of this study can provide restaurant executives with more confidence in pursuing internationalization as part of their risk management strategy, acknowledging that more international operations could mitigate restaurant firms’ systematic risk. More specifically, limited-service restaurants can more significantly enjoy the risk-reduction benefits by increasing their international operations than full-service restaurants based on the findings of this study. Furthermore, risk-averse investors could consider purchasing shares of limited-service multinational restaurants’ stocks to enjoy more risk-reduction benefits.

By focusing on the restaurant industry with consideration for the restaurant type, this study provides more tailored recommendations for implementing internationalization strategies with regard to risk management.

This study aims to identify why restaurant firms go public (IPO) despite high financing costs and which factors make firms stay public for the long term after an IPO. Also, this study aimed to link and compare restaurant firms’ pre- and post-IPO accounting information and how IPO proceeds were used.

This study used random-effects regression analysis with a number of dependent variables for a sample of 1,347 unbalanced panel data. In addition, logistic regression analyses were used to identify why restaurant firms were delisted within short periods after going public.

First, rebalancing financial structures was the most important reason for IPOs, whereas financing future growth was only a minor motivation. Second, post-IPO performance significantly differed between restaurant firms based on their pre-IPO financial conditions, as well as how they used IPO proceeds. Third, restaurant firms with low profitability, inefficient non-operating expenses and difficulties in generating revenue increased their financial burdens, which ultimately caused restaurant firms to be delisted within a short period after an IPO. Furthermore, the reasons for merging included cash shortages, large short-term liabilities and increased major operating expenses, together with increases in capital expenditures.

This study is unique, in that it explains the relationships between motivations for going public and post-IPO performances by directly linking the usages of IPO proceeds with firms’ operational performances. To the best of the authors’ knowledge, this study is the first to examine the effects of IPOs on restaurant firms’ operational, non-operational, investment and financial activities on firms’ performances.

The purpose of this study is to develop an index for financial constraints, specifically for restaurant firms, and to further validate the developed financial constraint index.

This study used logistic regression with a composite criterion based on the dividend payout ratio, KZ index and Cleary index to estimate restaurant firms’ financial constraints. Then, a fixed-effects regression was used to verify the validity of the measurement of restaurant firms’ financial constraints.

A restaurant firm’s operating profit, financial leverage, asset tangibility, sale of fixed assets and percentage change in number of employees are critical indicators for identifying financial constraints. The results indicated that in cases with positive operating cash flows, the effect of operating cash flow on capital investments continuously decreased as restaurant firms’ financial constraints increased.

This study is unique in that the specific financial and operational characteristics of restaurant firms were included in the model to determine financial constraint indicators, such as sale of fixed assets and percentage change in number of employees.

This study aims to examine how geographic diversification affects firms’ risk by introducing the franchising strategy as a moderator.

The panel regression analysis was conducted with a sample of US restaurant firms. Specifically, a two-way random (or fixed) effects model clustered by firm was used to test hypotheses.

Findings show that geographic diversification does not significantly affect restaurant firms’ risk. However, franchising aggravates the negative effect of geographic diversification on restaurant firms’ risk, which contradicts the traditional theories of franchising.

The results are expected to contribute to the diversification literature in the hospitality management by providing in-depth evidence for the effects of geographic diversification strategies on firms’ risk. Specifically, the study provides relevant theories for explaining the effect of geographic diversification in the restaurant context by examining franchising, a prominent strategy in the restaurant industry.

The results encourage restaurant firms to improve their managerial capability to react to changes in a geographically wider scope of markets and develop franchising contracts specifically to prevent misbehavior and moral hazard on the part of franchisees.

Considering the lack of research on the effect of geographic diversification on restaurant firms’ risk, this study examines not only the link between geographic diversification and firms’ risk but also a contingent factor, franchising.

This study aims to examine how information asymmetry, which refers to an information gap between a firm’s management and its investors regarding the firm’s true value, influences firms’ dividend and investment decisions in the restaurant industry. This study also investigated the moderating role of a firm’s level of franchising in the relationship between information asymmetry and these behaviors of restaurant firms.

This study used generalized method of moments panel regression analyses. Principal component analysis was also used to create a composite index of information symmetry.

This study demonstrated that in asymmetric information environments, restaurant managers tend to reduce dividend payments. In addition, this study showed that information asymmetry leads to restaurant managers’ investment inefficiency. However, the investment inefficiency of the restaurant industry was found to decrease as restaurant firms’ level of franchising increases.

Firms’ dividends and investment decisions are of great interest to investors because these decisions heavily influence investors’ wealth-maximization goals. By shedding light on the previously unrecognized determinants of dividend and investment behaviors in the restaurant industry, this study helps individual investors to make informed investing decisions.

Conflicting arguments can be made regarding the impact of asymmetric information environments on the dividend and investment behaviors of restaurant firms. This study aimed to verify these as-yet unclear relationships in the restaurant industry.

The existing literature has focused heavily on investigating the effect of corporate social performance (CSP) on financial performance (FP) but has not paid sufficient attention to an inverse causation of the relationship. Moreover, while some of the literature argues that FP positively affects CSP, based on the slack resources theory, others have found negative effects of FP on CSP, supporting the managerial opportunism perspective. Thus, this paper aims to address the impact of FP on CSP. Further, this study examines the moderating role of franchising to better understand the relationship.

This study uses and expands the models derived from the CSP literature to confirm the effects of FP on CSP with the moderating role of franchising within the restaurant industry. Using two-way fixed effects models, it effectively addresses important problems embedded in the panel data.

The findings show a positive effect of FP on CSP, which is inconsistent with Park and Lee’s (2009) findings and supports the slack resources theory. Further, the interesting results show that the impact of FP on CSP diminishes as a firm franchises more, supporting the double-sided moral hazard framework of the agency theory.

This paper fills the lacuna in both the existing literature on the relationship between CSP and FP and the franchising. This study contributes to enhancing restaurant practitioners’ understanding of the double-sided moral hazard of agency theory unique to franchising context.

The purpose of the current study is to investigate the possible existence of a synergistic effect of internationalization and corporate social responsibility (CSR) on a firm’s value performance.

To empirically test the argument, this study analyzed data from 40 US-based publicly traded restaurant companies (251 observations) from 2000 to 2011 by performing a two-way fixed-effects model.

This study’s findings support the hypothesis that when implemented simultaneously, internationalization and CSR have a negative synergistic impact on a restaurant firm’s value performance.

Restaurant managers might need to inquire thoroughly into the timing and content of CSR investment strategies while entering into new international markets. Restaurant executives may additionally need to focus more on effective risk management than other issues (e.g. growth or reputation) when developing both internationalization and CSR strategies simultaneously.

By suggesting and demonstrating a negative synergistic effect of internationalization and CSR on a firm’s value, this study presents new and unique insights into previous research regarding the combined effect of the two strategies.

The purpose of this study is to identify determinants of involuntary cross-listing (CL) of US restaurant companies on the Frankfurt Stock Exchange (FSE).

The study utilizes a mixed method design with an interview and a pooled logistic regression analysis with panel dataset using the company-clustered standard error to develop and test the hypotheses.

The empirical investigation identified determinants of involuntary CL by examining ten factors, including size, firm growth opportunities, leverage, financial flexibility, international operation, profitability, overall German economic condition, industry growth opportunities, restaurant type, and local operation. The study found three determinants – large size, favorable economic condition in Germany and positive industry growth opportunities – utilizing the sample that covers the entire periods of involuntary CL of US restaurant companies on the FSE.

This paper uncovers the phenomenon of involuntary CL, which many stock exchanges have strategically adopted by simplifying listing requirements for companies already listed in other stock markets, focusing on US restaurant companies. The number of involuntarily cross-listed US restaurant companies greatly increased to 50 percent of domestically listed US restaurant companies while those companies are largely unaware of the phenomenon. The research advances understanding of involuntary CLs, which previously received little attention.

This paper aims to explore the effect of hiring outside chief executive officers (CEOs) on restaurant performance. As outside CEOs have a mandate to bring changes but lack internal knowledge, this study expected that outside CEOs impose a significant influence on restaurant performance. It was further expected that the relationship is substantially moderated by franchising and recession.

The CEO data was manually collected from firms’ annual filings and the EXECOMP database. The COMPUSTAT database was used for company financial data. A two-way panel regression was used to examine the proposed relationships.

The results revealed that outside CEOs have a positive effect on growth but a negative effect on restaurant profitability. It was further turned out that franchising significantly moderates the outside CEO-performance relationship. However, the moderating effect of recession turned out to be insignificant.

The results suggested that outside CEOs play a critical role in determining restaurant performance. The results further imply that franchising helps to maximize the positive effect of outside CEOs while mitigating the adverse effects of outside CEOs.

This study is one of the first to examine the effect of outside CEOs in the hospitality context. Moreover, this study extended the literature by revealing the relationship in the restaurant industry and highlighting the importance of long-term organizational context.