Effect of Agency Problems on RTC Hotel Appraisals

Agency problems that helped cause the banking crisis in the United States in the 1980s impacted hotel appraisals competed for the Resolution Trust Corporation (RTC). Lower appraised values would help make more bids acceptable, helping to sell more assets quickly. The results indicate appraised hotel values were much lower than sales prices in states with a high number of bank failures

Agency Costs, Bankruptcy Costs and the Use of Debt in Multinational Restaurant Firms

The purpose of this paper is to understand whether multinational restaurant firms (MNRF’s) have higher agency and expected bankruptcy costs. Given this expectation, this may have an impact on the amount of debt incurred by MNRF’s. Overall, the findings are consistent with the existing literatue in terms of the positive relationship between MNRF’s and agency and bankruptcy cost. However, it was found that MNRF’s also have more total debt. This is surprising given the higher agency and bankruptcy costs. The importance of this research is that there may be considerations other than agency and bacnkruptcy costs affecting the capital structure decisions of MNRF’s

Effects of Changes in Economic Circumstances on Agency Relationships in the Appraisal Process, 1980-1997

The purpose of this study is to examine economic circumstances which motivated principals in the hotel appraisal process to influence appraised hotel values. The economiccircumstances are the background in which appraisals are completed and may be germane to the issue of appraisal accuracy. The study outlines the relationships in the process and examines the specific circumstances that may have motivated the parties to influence appraised values to be different than market values. Moreover, it provides a basis for further research and empirical tests of these relationships

An Initial Investigation of Firm Size and Debt Use by Small Restaurant Firms

This study examines whether or not size affects the use of debt used by small restaurant firms. Owners often use debt as a mechanism to minimize agency costs in large firms. However, there is no consensus in the literature about how to measure firm size. This study uses different proxies for size and finds the significant measures to be total assets, total sales, number of owners, and number of employees. The study finds number of owners and total assets to be variables with maximum explanatory power

A Review of Restaurant Valuation Literature - The Pre 2005 Perspective

This research examines pre 2005 restaurant valuation literature in an effort to identify unexplored areas in this emerging field. Although much has been written regarding valuation in general, there has been very little appraisal literature focusing specifically on restaurants. Of the research that has been conducted, there has been some controversy about whether the appropriate value of a restaurant is a market value or a going concern value. We also explore the continuing usage of “rules of thumb” in restaurant valuation. Although these rules are often based in theory as well as practice, their breadth can severely limit their usefulness. Accordingly, we examine the prevalence of rule-of-thumb usage in the literature and hope that this may motivate academic researchers to find evidence of the relative accuracy of these informal tools

Institutional investor preference for lodging stocks

Although previous studies showed evidence of increasing institutional investors in the lodging industry (Corgel & DeRoos 1994, 2003; Leung & Lee 2005; Ciochett et al. 2002), no empirical study has reported the determinant of institution’s preference for lodging stocks. Since institutions act as agents for other investors, their investment patterns may be different from individual investors. In the case of litigation, the court accepts an institution’s prudent investment based on the characteristics of assets in isolation. Thus, institutions will prefer lodging stocks with high liquidity, low book-to-market ratios, low long-term debt ratios and high short-term debt

An Examination of Capital Structure in the Restaurant Industry

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

The Impact of Dividend Policy on Institutional Holdings: Hotel REITS and Non-REIT Hotel Corporations

Previous research (Canina, Advani, Greenman, & Palimeri, 2001) shows that dividend initiations and dividend increases result in higher stock returns. Although institutions need to hold stocks that pay high dividends paying because of the prudent-man rule, recent research (Grinstein & Michaely, 2005) contradicts this practice. Since hotel REITs and non-REIT hotel corporations belong to the same industry but have different dividend policies, it is worth examining the impact of dividend policy on institutional holdings. We find institutions tend to prefer REITs. We also find institutions prefer large firms that make capital expenditures, regardless of REIT status