ISSN: 2225-8329
Open access
The purpose of this paper is to investigate the relationship between investment and financing decisions, focusing on small and medium-sized enterprises (SMEs) operating in the hotel industry. To achieve this purpose, it was carried out a dataset of 72 SMEs (492 firms/year observations). The sample includes Italian SMEs for the period 2010–2015. All the firms included in the sample fall into the definition of SMEs given in European Commission recommendation 2003/361/EC of 6 May 2003. Descriptive statistics, Pearson correlation, and CCA were used. The findings showed the relationship between the groups of balance sheet items. However, results also highlight that firms used their own resources, typically associated with long-term investments, to finance current assets. This behavior may have been caused by environmental and/or market conditions. In particular, the credit crunch that followed the 2008 financial crisis may have affected business behavior.
1. Banca d’Italia (2019), Turismo in Italia: numeri e potenziale sviluppo, Questioni di economia e finanza (occasional paper), n. 505.
2. Carter, R., Van Auken, H. (1990), A comparison of small business and large corporations: interrelationships among position statements, Journal of Business and Entrepreneurship, 2, pp. 73-80.
3. Crum, M. R., Lund, D. B., Van Auken, H. (1987), A CCA of carrier financial strategy: The case of airline deregulation, Transportation Research, 21 (3), pp.179-190.
4. Chen, J., Sanchez, J. A., Sensini, L. (2014), Growth opportunities and ownership structure as determinants of italian firms leverage, ACRMC, pp. 365-386.
5. Darwish, S. (2014). The Role of Universities in Developing Small and Medium Enterprises (SMEs): Future Challenges for Bahrain. International Business and Management, 8(2), 70-77.
6. Dalbor, M., Upneja, A. (2004), The investment opportunity set and the long-term debt decision of U.S. lodging firms. Journal of Hospitality and Tourism Research 28(3): 346–355.
7. Devesa, M., Esteban, L. (2011), Spanish hotel industry: indebtedness determinants, Applied Economics, 43(2011), pp. 4227-4238.
8. Elgonemy, A. (2002), Debt-financing alternatives: refinancing and restructuring in the lodging industry Cornell Hotel and Restaurant Administration Quarterly, 43 (2002), pp. 7-21.
9. Hanks, S. (1990), The organizational life cycle: integrating content and process, Journal of Small Business Strategy, 1, pp. 1-13.
10. Hall, G., Hutchinson, P., Michaelas, N. (2000), Industry effects on the determinants of unquoted SME’s capital structure. International Journal of the Economics and Business. 7(3), 297–312.
11. Helleloid, R. T., Sheikholeslami, M. (1996), Accounting reporting implications of balance sheet relationships for US multinationals, Journal of International Accounting and Taxation, 5(1), pp. 21-37.
12. Hua, N., Nusair, K., Upneja, A. (2012), Financial characteristics and outperformance, evidence of a contemporary framework from the US lodging industry, International Journal of Contemporary Hospitality Management, 24(2012), pp. 574-593.
13. Kraus, A., Litzenberger, R. H. (1973), A state-preference model of optimal financial leverage The Journal of Finance, 28(4), pp. 911-922.
14. Lee, S., Qu, X. (2011), An examination of the curvilinear relationship between capital intensity and firm performance for publicly traded US hotels and restaurants, International Journal of Contemporary Hospitality Management, 23, pp. 862-880.
15. Lucas, D. J., McDonald, R. L. (1990), Equity issues and stock price dynamics, Journal of Finance, 45(4), pp. 1019-1043.
16. Myers, C. (1984), The capital structure puzzle, The Journal of Finance, 39(3), pp. 574-592.
17. Myers, S. C., Majluf, N. S. (1984), Corporate financing and investment decisions when firms have information that investors do not have Journal of Financial Economics, 13(2), pp.187-221.
18. Modigliani, F., Miller, M. (1958), The cost of capital, corporation finance and the theory of investment. The American Economic Review 48(3): 261–297.
19. Modigliani, F., Miller, M. (1963), Corporate income taxes and the cost of capital: a correction. The American Economic Review 53(3): 433–443.
20. Pacheco, L., Tavares, F. (2017), Capital structure determinants of hospitality sector SMEs, Tourism Economics, Vol. 23 (I), 113-132.
21. Sensini, L. (2017), Capital Structure Determinants in Italian Sme’s: An Empirical Study, ICAFR, 124-144.
22. Sheel, A. (1994), Determinants of capital structure choice and empirics on leverage behaviour: a comparative analysis of hotel and manufacturing firms. Hospitality Research Journal 17(3), 3–16.
23. Such, M., Parte, L., Garre, A. (2009), The financial structure of the Spanish hotel industry: evidence from cluster analysis. Tourism Economics 15(1), 121–138.
24. Simonson, D. G., Stowe, J. D., Watson, C. J. (1983), A CCA of commercial bank asset/liability structures, Journal of Financial and Quantitative Analysis, 18 (1), pp. 125-140.
25. Stewart, D., Lowe, D. (1968), A general canonic correlation index, Psycological Bullettin, Summer, pp. 160-163.
26. Stowe, J. D., Watson, C. J., Robertson, T. D. (1980), Relationships between the two sides of the balance sheet: a CCA, Journal of Finance, 35(4), pp. 973-980
27. Tang, C. H., Jang, S. (2007), Revisit to the determinants of capital structure: a comparison between lodging firms and software firms International Journal of Hospitality Management, 26, pp. 175-187.
28. Tyejbee, T., Bruno, A. (1983), A model of venture capitalist investment patterns, Management Science, 30, pp. 1051-1066.
29. Van Auken, H. E., Tseng, S. (1993), A financial comparison between Taiwanese and US firms: evidence of differential financial strategies, The Journal of Entrepreneurship, 2(1), pp. 59-71.
30. Van Auken, H. E., de Lema, D. G. P. (2003), Financial strategies of Spanish firms: a comparative analysis by size of firm, Journal of Small Business and Entrepreneurship, 17(1), pp. 17-30.
To cite this article: Bello, C., Sensini, L. (2020). Financing Decisions of SMEs in the Hotel Industry, International Journal of Academic Research in Accounting, Finance and Management Sciences 10 (2):9-14.
Copyright: © 2020 The Author(s)
Published by Human Resource Management Academic Research Society (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode