Tax Burden and the Mismeasurement of State Tax Policy

Tax Burden, defined as the ratio of total tax revenues over personal income, is frequently used to measure state tax policy. The authors analyze the empirical relationship between changes in Tax Burden and changes in tax policies from 1987 to 2000 using states’ forecasts of revenue impacts of new tax legislation. Their two major findings have important implications. First, they demonstrate that income-induced, nontax policy changes are a significant determinant of changes in Tax Burden. These income effects are likely to cause misinterpretation when Tax Burden is used as a variable in economic growth regressions. Second, they estimate that approximately half of the total variation in Tax Burden is due to changes in nontax policy factors. This finding quantifies the extent of the “mismeasurement” problem that has been discussed, but not analyzed, in previous literature. In concluding, the authors promote the use of alternative approaches for estimating the economic effects of taxes.Yeshttps://us.sagepub.com/en-us/nam/manuscript-submission-guideline

Does franchising create value? An analysis of the financial performance of US public restaurant firms

Author's OriginalIt is commonly believed that the franchising method of distribution provides strategic and operational benefits to the companies that adopt it. These benefits should result in superior financial performance as compared to that of firms that do not use franchising. Yet, the empirical evidence of the effects of franchising on financial performance is sparse and mixed. The purpose of this paper is to further examine the empirical evidence of the impact of franchising on a firm’s financial performance by using performance metrics (Economic Value Added and Market Value Added) that are extensively used in corporate finance. This study focuses on the US public restaurant sector. The results provide some evidence that franchising firms create more market and economic value than do non-franchising firms. A revised version of this paper has since been published in the International Journal of Hospitality and Tourism Administration. Please use this version in your citations.Aliouche, E. & Schlentrich, U. (2009). Does Franchising Create Value? An Analysis of the Financial Performance of US Public Restaurant Firms. International Journal of Hospitality & Tourism Administration, 10(2), 93-10

Determinants versus Composite Leading Indicators in Predicting Turning Points in Growth Cycle

Turning points occur when the growth rate moves from an expansion period to a contraction period or from a contraction period to an expansion period. To minimize risks, an accurate forecasting of turning points in travel demand is needed. To predict turning points in the Hong Kong inbound tourism growth cycle, this study estimated logistic and probit regression models in the first stage with tourism demand determinants such as income, price at the destination, price at the substitute destination, and oil price. Subsequently, logistic and probit regression models were estimated using the constructed composite leading indicator, OECD leading indicator, and business confidence indicator. These models were subsequently assessed using the quadratic probability score. The logit or probit model with composite leading indicator was found to be the best for predicting turning points. The findings revealed that the change in real income is the most important factor for the occurrence of turn in tourism growth cycle