Type of Submission

Refereed Article


The purpose of this study is to investigate the wide diversity in financing of publicly traded restaurant firms in the United States. Fisher discriminant functions were estimated and firm features differentiating light debt users from heavy debt users were identified and analyzed. The study has found that managerial control is the most important contributor to the diversity in debt use in the restaurant industry. Size and type of operation also explain the diversity. The analysis shows that small full-senice restaurant firms with low managerial ownership tend to use less debt, while large economy/buffet or fast-food restaurant firms under tight managerial control are likely to be heavy debt users.