Type of Submission
The potential association between a firm’s strategic use of its degree of operating leverage (DOL) and its value premium has been a subject of considerable interest and debate among researchers in the past (Carlson, Fisher, & Giammarino, 2004; Garcia-Feijoo & Jorgensen, 2010). Existent finance literature also discusses the trade-off between DOL and degree of financial leverage (DFL) (Dugan & Shriver, 1992; Mandelker & Rhee, 1984). While most researchers focus on cross-sectional research in this area, Huffman (1989) further documented variation in the DOL and DFL across industries. The lodging sector of the hospitality industry is unique in many ways (Lee and Jang, 2007; Madan, 2007; Singal, 2015). This paper evaluates the impact of DOL on the value premium of lodging firms, the trade-off between DOL and DFL in these firms, and how this important lever can be used by manage- ment to make strategic business decisions.
Pawar, Akshaya; Gholap, Raju; and Sheel, Atul
"Strategic Effect of Degree of Operating Leverage on Value Premium of Lodging Firms,"
Journal of Hospitality Financial Management: Vol. 27
, Article 3.
Available at: https://scholarworks.umass.edu/jhfm/vol27/iss1/3