Financial leverage phenomenon in hospitality industry sub-sector portfolios


Firm-specific factors, Hospitality industry, Financial leverage proxies, Macroeconomic indicators, Sub-sector portfolios, Degree of financial leverage


Purpose: This paper aims to seek answers to a primary question: “How much do divergent leverage factors account for fluctuations in time-varying financial leverage in leading hospitality sub-sectors decomposed by four exclusive sub-portfolios?” In the path of seeking answers, this paper investigated the effects of both firm-specific and macroeconomic indicators to firms’ varying financial leverage in those primary sub-sectors overtime. Design/methodology/approach: In each sub-sector portfolios, firms were sorted based on market-to-book values (Mktbkit) with median breakpoint percentiles. For hypothesis testing, this paper constructed panel regression models with firm fixed-effects to layout fluctuant financial leverage phenomenon engaged with a set of 11 leverage factors in each Mktbkit sorted sub-sector portfolios. Findings: Results exhibited assorted evidences. The bottom line was: firms with different market capitalization rates in each portfolio acted differently in regard to the magnitude of financial leverage across time. Research limitations/implications: The final sample of 415 firms in four sub-sector portfolios sufficiently embraced financial leverage composition in the hospitality industry across time. However, by reason of lack of data in the other intra-hospitality industries, such as gaming and/or cruise lines, findings did not represent the firms operated in those sub-industries. Originality/value: This paper departed from the established context of the previous literature in the manner that it expects to add to the literature by demonstrating the core drivers causing the deviations in financial structure in four exclusive, hospitality industry sub-sector portfolios with varying leverage proxies overtime.

Publication Date


Original Citation

Kizildag, M. (2015). Financial leverage phenomenon in hospitality industry sub-sector portfolios. International Journal of Contemporary Hospitality Management, 27(8), 1949-1978.

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Source Title

International Journal of Contemporary Hospitality Management






Rosen College of Hospitality Management


Rosen College of Hospitality Management

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