وابستگی های متقابل ترازنامه متقاطع شرکت های رستوران : تجزیه و تحلیل همبستگی متعارف

Using canonical correlation analysis, this study examined the interdependencies in investing and financing decisions of restaurant firms. The results indicated that the similar four cross-balance sheet interdependencies exist in the restaurant industry as identified by previous studies for different industries and companies in various countries: (1) maturity matching structure of assets and liabilities, (2) use of long-term assets as collateral for long-term debt, (3) use of accounts payable to finance operational assets (e.g., inventories and other current assets), and (4) concurrent use of cash and stockholders’ equity to manage risk. Additionally, this study discovered the unique financing features of the restaurant industry: (1) restaurant firms did not relate account receivables to short-term liabilities, and (2) they financed their operational assets with stockholders’ equity in addition to account payable. The findings are expected to contribute to the understanding of restaurant financing behavior as related to assets structures. This study also demonstrated the usefulness of canonical correlation analysis in extracting information related to financial management strategy.

Tobin's (1958) separation theorem and Modigliani and Miller's (1958) classic theory for capital structure provided foundations for modern finance theories. In developing their theories, they assumed that a company's investing and financing decisions are independently made. This assumption suggests independence between the asset and liability/equity proportions of a balance sheet, which is known as ‘separation’ and it contributes to simplifying corporate financial conditions and easier understanding of financial decision-making. However, the actual empirical studies have presented interdependencies between the two sides of a balance sheet (Carter and Van Auken, 1990; Helleloid and Sheikholeslami, 1996; Simonson et al., 1983; Stowe et al., 1980; Van Auken et al., 1993). In a study of large industrial firms, Stowe et al. (1980) revealed cross-balance sheet interdependencies in four ways: (1) hedging through the maturity matching of assets and liabilities, (2) use of assets as collateral for loans, (3) use of accounts payable to finance inventories, and (4) risk management by using less leverage and/or by maintaining greater liquidity. Simonson et al. (1983) also reported evidence of the existence of asset/liability hedging to manage interest rate risk in the US banking industry. Based on the Stowe et al. (1980), Carter and Van Auken (1990) attempted to identify dependencies between investing and financing decisions in small firms, as compared to large companies. Reflecting their unique business environments, small firms tended to manage risk through the simultaneous use of cash and debt. It might be due to their greater difficulty of obtaining capital from equity markets. In addition, small firms rely heavily on accounts payable instead of short-term debt to finance current assets. In another study conducted by Van Auken et al. (1993), the cross-balance sheet interdependencies were also identified for Korean firms in comparison to US firms. All four relationships between the two sides of the balance sheet were detected in Van Auken et al.'s study (1993). One unique finding was that Korean firms depend heavily on the use of current debt to finance not only current assets but also long-term assets, which is different from the findings of other studies (maturity matching behavior). Similarly, Helleloid and Sheikholeslami (1996) undertook a study for US multinationals to examine the differences of cross-balance sheet relationships and found a couple of unique findings: (1) long-term assets are financed by a combination of short-term and long-term debt, and (2) current assets (accounts receivable, inventories, and other current assets) are financed by stockholders’ capital. The researchers explained that those unique behaviors might be attributed to local factors within the host countries including political risks, currency risks, and regulatory conditions. The empirical results of the aforementioned studies generally suggest that the separation theorem is not an appropriate picture of corporate finance reality. The studies have also demonstrated that financial strategies of firms are influenced by economic and political conditions, cultural elements, and financial market situations, which implies that the interdependency behaviors between investing and financing decision may vary by country and/or by industry. In this regard, it is necessary to investigate the investing and financing relationships of the hospitality industry since its unique features of the relationships have not been directly examined in the academia. Thus, this study investigated whether the four interdependency behaviors of the two sides of the balance sheet identified in the previous studies exist in the US restaurant industry, and examined unique characteristics of financing behaviors in the restaurant firms. Canonical correlation was commonly used in the previous studies because it is a statistical technique for identifying interrelationships between the two sets of variables (left and right-hand sides) of the balance sheet. Therefore, this study also employed the same technique to analyze financial data of restaurant firms. The results of this study are expected to provide information as to how restaurant firms make financing decisions as related to assets structures and about the unique characteristics of the industry's financing environments.

The primary objective of this study was to investigate interdependencies between assets and liabilities/stockholders’ equity in restaurant firms. Using CCA, this study indicates that, like other industries, the restaurant industry displayed cross-balance sheet interdependencies. It implies that the investing and financing decisions for restaurant firms were not independently made, but they were related to each other. Additionally, this study identified the unique financing features of the restaurant industry. Restaurant firms appeared not to relate account receivables to short-term liabilities and they financed their operational assets (e.g., inventories and other current assets) with stockholders’ equity in addition to account payable. These unique findings are in contrast to previous studies reporting that account receivables were highly related to account payable and that operational assets were usually financed with current liabilities. The results may demonstrate the adaptation of restaurant firms to their financial environments, which limited the firms to have access to sources of short-term funds. However, it is believed that restaurant firms could be more innovative in optimizing financial management by matching account receivables with account payables as much as possible. Thus, this study suggests that managers and executives of restaurant firms need to make more efforts in building close relationships with bankers and suppliers. This study also shows that canonical correlation is an effective tool in portraying financial management strategy about the investing and financing decisions of companies. Given the difficulties of fully capturing the financial picture with a single account, CCA provides a useful statistical alternative that overcomes many of the problems by considering the variance within a set of independent variables and within a set of dependent variables, as well as the between group variance. In this respect, it is recommended to further use CCA as an appropriate technique for the study of financial management using both left and right-hand sides of balance sheet. The primary limitation of this study is the generalizability of the study findings. Since it has been generally agreed that the three-year study period (2001–2003) was a period of economic downturn, our results may not be applicable to the restaurant industry when economic situation is good. As one of the financing behaviors of restaurant firms, this study found out that the firms were dependent upon stockholders’ equity to finance operational assets such as inventories and other current assets. The unique financing behavior may be due to an economic slowdown situation when banks and suppliers tend not to provide credit. Thus, the results of this study may be valid only for the period of economic downturn. Nevertheless, using CCA, this study demonstrated a useful approach to extract information related to financial management. This study suggests that CCA is a valid technique to identify and understand financial management strategy of firms and its changes. ARTICLE IN PRESS S. Jang, K. Ryu / Hospitality Management 25 (2006) 159–166 165 Therefore, future research is hoped to utilize the technique in analyzing financial statement data for other research topics such as financial performance analysis and accounting and market risk determinants of companies.