International Journal of Hospitality and Tourism Systems

Open Access Open Access  Restricted Access Subscription Access
Open Access Open Access Open Access  Restricted Access Restricted Access Subscription Access

Parametric Determinants of Borrowings in Indian Hotel Industry.


Affiliations
1 Institute of Management Studies, Kurukshetra, University, Kurukshetra (Haryana)., India
     

   Subscribe/Renew Journal


This paper provides an empirical examination of the determinants of borrowings in hotel companies listed on Bombay Stock Exchange. A sample of 50 hotel companies listed on BSE was studied and it is revealed that the 'company size', 'return on capital employed' and 'non-debt tax shield' are the most important determinants of total debt ratio in hotel industry in India. While the 'collateral value of assets', 'company size' and 'return on capital employed' are the most important determinants of long term debt ratio in hotel industry in India. The paper has been divided into five sections i.e. backdrop, review of literature, research methodology, results and discussions followed by conclusions.

Keywords

Determinants, Borrowing, Hotel Industry, India
Subscription Login to verify subscription
User
Notifications
Font Size


  • Akhtar, Shumi M. and Oliver, Barry R., (2009) Determinants of Capital Structure for Japanese Multinational and Domestic Corporations. International Review of Finance, Vol. 9, Issue 1-2, pp. 1-26, Available at SSRN: http://ssrn.com/abstract=1414482 or doi:10.1111/j.1468-2443.2009.01083.x,Accessed on the 11th of December 2009, at 11.10 am.

  • Balboa, Marina, Marti, Jose and Tresierra, Alvaro, (2009) Capital Structure Determinants in Growth Firms Accessing Venture Funding, Available at SSRN: http://ssrn.com/abstract=1344267, Accessed on the 11th of December 2009, at 11.20 am.

  • Bancel, Franck and Mittoo, Usha R., (2002) The Determinants of Capital Structure Choice: A Survey of European Firms, JEL Classifications: G32, G15, F23, Working Paper Series , EFMA 2002 London Meetings. Available at SSRN: http://ssrn.com/abstract=299172 or DOI: 10.2139/ssrn.299172, Accessed on the 20th of December 2009, at 12.26 pm.

  • Bevan, Alan A. and Danbolt, Jo, (2002) Dynamics in the Determinants of Capital Structure in the UK, Capital Structure Dynamics Working Paper No. 2000-9. JEL Classifications: G32, G3, Available at SSRN: http://ssrn.com/abstract=233551 or DOI: 10.2139/ssrn.233551, Accessed on 21st of December 2009, at 10.00 am.

  • Bhaduri, S., (2002) Determinants of capital structure choice: a study of Indian corporate Sector, Journal of Applied Financial Economics, Vol-12, Issue 9, pp655-665.

  • Bhole L. M. and Mahakud, J. (2004), Trends and Determinants of Capital Structure in India: A Panel Data Analysis, Finance India, Vol- XVIII, No. 1, pp 37-55.

  • Chikolwa, Bwembya, (2009) Determinants of Capital Structure for A-REITs ,15th Pacific Rim Real Estate Society Conference, Sydney, Australia, Available at SSRN: http://ssrn.com/abstract=1332799. Accessed on 15th of December 2009, at 9.30 am.

  • Datta M. and Majumdar R., (2006) Factors Affecting the Borrowing Decisions of Indian Corporates: How Far They Differ from the Global Trend? – An Empirical Study”, Indian Accounting Review, Vol- 10, No 1, pp 39-48.

  • Datta, Debabrata and Agarwal, Babita ,(2009) Determinants of Capital Structure of Indian Corporate Sector in the Period of Bull Run 2003-2007 - An Econometric Study , Working Paper Series ,Available at SSRN: http://ssrn.com/abstract=1376064, Accessed on 29th of Nov. 2009, at 2.30 pm.

  • Datta, Manipadma and Majumdar, Raju, (2007) Determinants of Long Term Corporate Borrowing: Some Further Evidences from Indian Manufacturing Sector, Working Paper Series, JEL Classifications: G32. Available at SSRN: http://ssrn.com/pdf=1026841, Accessed on 16th December 2009, at 10.30 am.

  • De Jong, Abe, Nguyen, Thuy Thu and Kabir, Rezaul, (2008) Capital Structure Around the World: The Roles of Firm- and Country- Specific Determinants, Journal of Banking and Finance, Vol. 32, No. 9, 2008. Available at SSRN: http://ssrn.com/abstract=890525, Accessed on the 11th of December 2009, at 11.05 am.

  • DeAngelo, H. & Masulis, R., (1980) Optimal Capital Structure under Corporate and Personal Taxation , Journal of Financial Economics, Vol-8, Issue 1, pp 3-29.

  • Fama, E.F., Jensen, M., (1983) Separations of ownership and control, Journal of Law and Economics, No. 26, pp.301-325.

  • Kakni R.K. and Reddy V.N , (1998) Economic analysis of capital structure determinants, IIMC, working paper-333-1998, Available at SSRN: http://ssrn.com/abstract=957087, Accessed on 5th December 2009, at 5.30 pm.

  • Mahakud, J. and Bhole, L. M., (2003) Determinants of Corporate Capital Structure in India: A Dynamic Panel Data Analysis, ICFAI Journal of Applied Finance, Vol-9, No. 6, pp 41-52.

  • Majumdar, Raju, (2009) Determinants of Long Term Borrowing: Some Evidence from Indian Group Affiliated Manufacturing Firms , Working Paper Series , JEL Classifications: G32 ,Available at SSRN: http://ssrn.com/abstract=1374207, Accessed on 1st of December 2009, at 1.00 pm.

  • Myers, S. C., Majluf, N.S., (1984) Corporate finance and investment decisions when firms have information that investors do not have, Journal of Financial Economics No.13, pp.187-221.

  • Qigui, Liu and Tian, Gary Gang, (2009) Leverage Ratio and Determinants of Capital Structure in SMEs: Evidence from China, 22nd Australasian Finance and Banking Conference 2009. Available at SSRN: http://ssrn.com/abstract=1460375, Accessed on the 11th of December 2009, at 11.10 am.

  • Rajan, R. G. and Zingales, L, (1995) What Do We Know about Capital Structure? Some Evidence from International Data”, Journal of Finance, Vol-50, Issue 2, pp 1421-59.

  • Sapar, Narayan Rao and Lukose, Jijo, (2002)An Empirical Study on the Determinants of the Capital Structure of Listed Indian Firms” Working Paper Series,JEL Classifications: G32, Available at SSRN: http://ssrn.com/abstract=433120 or DOI: 10.2139/ssrn.433120, Accessed on 5th December 2009, at 9.00 am.

  • Titman, S., and Wessels R. (1988), “The Determinants of Capital Structure Choice”, Journal of Finance, No. 43, pp. 1-19.


Abstract Views: 212

PDF Views: 0




  • Parametric Determinants of Borrowings in Indian Hotel Industry.

Abstract Views: 212  |  PDF Views: 0

Authors

Sushil Kumar
Institute of Management Studies, Kurukshetra, University, Kurukshetra (Haryana)., India
B. S. Bodla
Institute of Management Studies, Kurukshetra, University, Kurukshetra (Haryana)., India

Abstract


This paper provides an empirical examination of the determinants of borrowings in hotel companies listed on Bombay Stock Exchange. A sample of 50 hotel companies listed on BSE was studied and it is revealed that the 'company size', 'return on capital employed' and 'non-debt tax shield' are the most important determinants of total debt ratio in hotel industry in India. While the 'collateral value of assets', 'company size' and 'return on capital employed' are the most important determinants of long term debt ratio in hotel industry in India. The paper has been divided into five sections i.e. backdrop, review of literature, research methodology, results and discussions followed by conclusions.

Keywords


Determinants, Borrowing, Hotel Industry, India

References