This Article Full Text (PDF) References Alert me when this article is cited Alert me if a correction is posted Services Email this article to a friend Similar articles in this journal Alert me to new issues of the journal Add to Saved Citations Download to citation manager Request Permissions Request Reprints Add to My Marked Citations Citing Articles Citing Articles via Google Scholar Citing Articles via Scopus Google Scholar Articles by Upneja, A. Articles by Dalbor, M. C. Search for Related Content Social Bookmarking                         What's this?

An Examination of Leasing Policy, Tax Rates, and Financial Stability in the Restaurant Industry

The Pennsylvania State University, aupneja{at}psu.edu

Michael C. Dalbor

University of Southern Mississippi, michael.dalbor{at}usm.edu

Prior research has examined the relationship between debt financing and marginal tax rates to help explain the capital structure choice of firms. However, this type of measure is subject to an endogeneity problem, whereby an examination of postfinancing tax rates and debt financing produces a spurious negative relationship. Therefore, a before-financing tax rate may be a more accurate indicator of the use of debt financing versus leasing. This article uses both tax rate estimates to examine the relationship between tax rates and leasing behavior for a sample of restaurant firms. The authors also document a negative relation between the use of operating leases and the marginal tax rate faced by the firm and compare the accuracy of the two tax rate measures in predicting leasing and debt policy. Finally, the authors examine the relationship between leasing behavior and a firm’s financial stability.

Key Words: leasing • tax rates • capital structure

Journal of Hospitality & Tourism Research, Vol. 23, No. 1, 85-99 (1999)
DOI: 10.1177/109634809902300107


CiteULike    Complore    Connotea    Del.icio.us    Digg    Reddit    Technorati    Twitter    What's this?