Convex-concave effect of financial flexibility on hospitality performance: quantile regression approach
International Journal of Contemporary Hospitality Management
ISSN: 0959-6119
Article publication date: 23 November 2021
Issue publication date: 21 January 2022
Abstract
Purpose
The purpose of this paper is to study the influence of financial flexibility (FF) on enterprise performance (EP) within Taiwan’s hospitality industry during the COVID-19 shock and explore whether EP varies with hospitality industry characteristics.
Design/methodology/approach
Secondary data of 39 Taiwan Stock Exchange-listed hospitality firms were collected from the Taiwan Economic Journal databases. Quantile regression analysis was applied to examine the FF-EP relationship
Findings
The results evidence that there is a U-shaped (convex) FF-EP relationship for hospitality firms in the 10th, 25th and 50th Tobin’s Q quantiles and in asset-heavy firms. For asset-light firms, FF has an inverted U-shaped (concave) effect on EP in the 90th Tobin’s Q quantile
Practical implications
The empirical results highlight the need for Taiwan’s hospitality industry as a whole to take rolling adjustment and optimization of FF and concentrate on liquidity risk management after the COVID-19 pandemic and for long-term sustainability.
Originality/value
To the best of the authors’ knowledge, this study is one of the first to examine the nonlinear FF-EP relationship in the hospitality industry of Taiwan, particularly amid the COVID-19 shock. Moreover, this study extends current literature by revealing the hospitality industry’s FF-EP relationship and highlights the importance of the pandemic crisis context.
Keywords
Acknowledgements
The authors would like to thank the editor and anonymous reviewers for their valuable and constructive comments, which have led to a significant improvement in the manuscript.
Funding: This research received no external funding.
Citation
Chang, B.-G. and Wu, K.-S. (2022), "Convex-concave effect of financial flexibility on hospitality performance: quantile regression approach", International Journal of Contemporary Hospitality Management, Vol. 34 No. 2, pp. 687-712. https://doi.org/10.1108/IJCHM-07-2021-0867
Publisher
:Emerald Publishing Limited
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