Who makes acquisitions? An empirical investigation of restaurant firms

Tarik Dogru, Ozgur Ozdemir, Murat Kizildag and Aysa Ipek Erdogan
Additional contact information
Tarik Dogru: 7823Florida State University, USA
Ozgur Ozdemir: 14722University of Nevada, USA
Murat Kizildag: 6243University of Central Florida, USA
Aysa Ipek Erdogan: 52949Bogazici University, Turkey

Tourism Economics, 2021, vol. 27, issue 1, 260-268

Abstract: The purpose of this study is to examine the financial and operational factors that explain acquisition decisions in restaurant firms. We analyze the effects of franchising, dividends, leverage, Tobin’s Q , total assets, sales growth, and cash flows on restaurant firms’ acquisition decisions. The findings show that firms with high growth prospects and excess cash flows (i.e. small firms and franchising restaurant firms) are more likely to make acquisitions than their counterparts. Furthermore, firms with higher dividend payouts are less likely to engage in acquisition deals due to lack of cash. Shareholders perceive acquisitions to be value-decreasing only if large restaurant firms (not necessarily franchising) make acquisitions, while shareholders perceive acquisitions to be value-increasing when franchising firms make acquisitions. The findings provide partial support for the postulations of overinvestment and underinvestment theories. Theoretical and practical implications are discussed.

Keywords: acquisitions; cash flows; determinants; dividends; franchising; restaurants (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/1354816619875849 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:toueco:v:27:y:2021:i:1:p:260-268

DOI: 10.1177/1354816619875849

Access Statistics for this article

More articles in Tourism Economics
Bibliographic data for series maintained by SAGE Publications ().