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Examination of Various Financial Risk Measures for Lodging Firms

^* To whom correspondence should be addressed. E-mail: seokilee{at}temple.edu.

	Abstract

Financial researchers, including those concentrating on the lodging industry, use various financial risk measures for their studies. Examples of those risk measures are beta, earnings variability, bankruptcy probability, debt-to-equity ratio and book-to-market ratio. The purpose of this study is, first, to descriptively investigate various financial risk measures used in the lodging financial literature by performing factor analysis and identifying four distinct risk groups. Second, this study examines the predictive ability of the four risk groups for lodging firm performance. The findings of this study suggest that strategic and stock performance risk factors better represent a lodging firm’s financial risk than do bankruptcy and firm performance risk factors, and also, ROA than ROE better estimates lodging firm performance in terms of their relationships with financial risk factors.

First published on March 3, 2008, doi:10.1177/1096348007313266

Journal of Hospitality & Tourism Research 2008;32:255.

A more recent version of this article appeared on May 1, 2008


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