Short-Term Debt and Firm Performance in the US Restaurant Industry: The Moderating Role of Economic Conditions

Seoki Lee and Michael C. Dalbor
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Seoki Lee: School of Hospitality Management, The Pennsylvania State University, 217 Mateer, University Park, PA 16802, USA
Michael C. Dalbor: William F. Harrah College of Hotel Administration, University of Nevada, Las Vegas, NV 89154-6013, USA

Tourism Economics, 2013, vol. 19, issue 3, 565-581

Abstract: Based on the strategic debt argument, this study hypothesizes that short-term debt generally leads a restaurant firm to poor performance due to the lack of a strategic approach from using short-term debt. The study further examines the moderating role of economic conditions in the relationship between short-term debt and firm performance through a pooled regression analysis with heteroscedasticity-consistent standard errors. The data are from publicly traded US restaurant firms for the period 1990–2009. The findings support the research hypothesis that short-term debt in general has a negative impact on the performance of restaurant firms, while the negative effects are significantly reduced during economic downturns.

Keywords: short-term debt; hotel industry; moderating effect; economic conditions (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:toueco:v:19:y:2013:i:3:p:565-581

DOI: 10.5367/te.2013.0219

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