Increased Interest Expense and Management's Expense Preference Behaviour of Publicly-Traded Restaurant Firms

Abstract

The purpose of this research was to examine whether or not firms in a lessregulated industry with high competition exhibit expense preference behaviour, originally posited by Williamson (1963) with regards to interest expense. We used the restaurant industry to examine this issue because the restaurant industry is very sensitive to changes in market conditions due to its low profit margin. Interest expenses are exogenously determined and can have a serious impact on the profitability of the restaurant firms. The major finding of this paper shows that 'other expenses' increase along with interest expense. Managers do exhibit expense preference behaviour.

Publication Date

4-1-2010

Original Citation

Upneja, A., Dalbor, M., Hua, N., & Repetti, T. (2010). Increased Interest Expense and Management's Expense Preference Behaviour of Publicly-Traded Restaurant Firms. Journal Of Services Research, 10(1), 69-84.

Number of Pages

69-84

Document Type

Paper

Language

English

Source Title

Journal of Services Research

Volume

10

Issue

1

College

Rosen College of Hospitality Management

Location

Rosen College of Hospitality Management

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