The Value Effects of Changes in Leverage

Bas, T, Sivaprasad, S. and van Dellen, S. 2020. The Value Effects of Changes in Leverage. Tourism Analysis: An Interdisciplinary Tourism & Hospitality Journal. Advanced online publication. https://doi.org/10.3727/108354220X15961981728521

TitleThe Value Effects of Changes in Leverage
TypeJournal article
AuthorsBas, T, Sivaprasad, S. and van Dellen, S.
Abstract

It is a well-established fact that the Travel, Hospitality and Leisure industry is heavily reliant on external financing to fund their fixed assets component. Thus, firms may increase or decrease their debt levels depending on their financing needs. We examine the association between changes in leverage and economic performance of a firm and contend that changes in leverage contain information about the performance of firms and hence are value relevant. Using a sample of 164 listed U.S. firms, we observe that changes in leverage are indeed value relevant. Additionally, given that the level of capital intensity varies significantly within the various sub-sector groups in the industry, we also investigate the value effects of changes in leverage in the sub sectors.

KeywordsTravel
Hospitality and Leisure Industry
Changes in Leverage
Capital Structure
Returns
JournalTourism Analysis: An Interdisciplinary Tourism & Hospitality Journal
ISSN1083-5423
Year2020
PublisherCognizant Communication Corporation
Digital Object Identifier (DOI)https://doi.org/10.3727/108354220X15961981728521
Web address (URL)https://www.ingentaconnect.com/content/cog/ta/pre-prints/content-2019-0054
Publication dates
Published online01 Aug 2020

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