Restructuring In The Hospitality Industry

In her dialogue entitled - Restructuring in the Hospitality Industry - Elisa S. Moncarz, Associate Professor, the School of Hospitality Management at Florida International University, intends for you to know the following: “Recent years have seen a proliferation of restructurings of major American corporations creating an extremely important issue that has affected U.S. business. This article discusses restructuring issues in the hospitality industry, focusing attention on its causes and motivations, as well as on its benefits and perils. The author considers the impact of restructuring on investors and management while examining recent restructurings involving hospitality firms.” In defining the concept of restructuring, Associate Professor Moncarz informs you, “Restructuring entails the implementation of fundamental and comprehensive modification of a company's operational and/or financial structure.” “It has, indeed, become fashionable to take a company apart and put it back together in a different form,” the author says. Additionally, Moncarz refers to a Wall Street Journal study, dated August 1985, which reveals that nearly half the large American corporations were, or were soon to be restructured in the 1984/85 time frame. There are several distinct types of restructurings and the author wants you to be aware of some of them. “…threats of takeover attempts, the larger part of all restructuring have been initiated willingly in order to expand or divest a company's line of business (i.e., operational restructurings) or redirect its finances (i.e., financial restructurings),” the author reveals. “Two principal types of operational restructurings are mergers and acquisitions [M&A], and divestitures [disposing of unwanted units or assets],” Moncarz further defines the concepts of expansion and divestiture. The author explains several types of financial restructuring sketches used in the hospitality industry, including stock re-purchasing, debt issuances and redemptions, swapping debt for equity, and effective theories of realigning debt through extending loans and/or revising terms. To expand their businesses, Moncarz makes anecdotal reference to several major food and beverage corporations that have successfully employed operational restructuring principles. The author wades into the shallow end of the hostile takeover pool by explaining some of the corporate restructuring concepts used to repel that aggressive technique. Walt Disney Company completely redesigned their entire upper level management structure in a successful effort to thwart a hostile takeover bid by corporate raider Saul P. Steinberg, Moncarz informs. To close, the author touches on leveraged buyouts [LBOs], and stock repurchases to divest unwanted divisions and immobilize hostile takeover attempts. A lengthy table of - Selected Restructurings in the Hospitality Industry [1982 to date of article] – is also included.

World-Class Service

In the discussion - World-Class Service - by W. Gerald Glover, Associate Professor, Restaurant, Hotel and Resort Management at Appalachian State University and Germaine W. Shames, Hilton International, New York, Glover and Shames initially state: “Providing world-class service to today's traveler may be the key for hospitality managers in the current competitive market. Although an ideal, this type of service provides a mandate for culturally aware managers. The authors provide insight into several areas of cultures in collision.” Up to the time this essay is written, the authors point to a less-than-ideal level of service as being the standard in the hospitality industry and experience. “Let's face it - if we're ever to resurrect service, it will not be by going back to anything,” Glover and Shames exclaim. “Whatever it was we did back then has contributed to the dilemma in which we find ourselves today, handicapped by a reactive service culture in an age that calls for adaptiveness and global strategies,” the authors fortify that thought. In amplifying the concept of world-class service Glover and Shames elaborate: “World-class service is an ideal. Proactive and adaptive, world-class service feels equally right to the North American dignitary occupying the Presidential Suite, and the Japanese tourist staying in a standard room in the same hotel.” To bracket that model the authors offer: “At a minimum, it is service perceived by each customer as appropriate and adequate. At its best, it may also make the customer feel at home, among friends, or pampered. Finally, it is service as if culture matters,” Glover and Shames expand and capture the rule of world-class service. Glover and Shames consider the link between cultures and service an imperative one. They say it is a principle lost on most hospitality managers. “Most [managers] have received service management education in the people are people school that teaches us to disregard cultural differences and assume that everyone we manage or serve is pretty much like ourselves,” say Glover and Shames. “Is it any wonder that we persist in setting service standards, marketing services, and managing service staff not only as if culture didn't matter, but as if it didn't exist?!” To offer legitimacy to their effort Glover and Shames present the case of the Sun and Sea Hotel, a 500-room first class hotel located on the outskirts of the capital city of a small Caribbean island nation. It is a bit difficult to tell whether this is a dramatization or a reality. It does, however, serve to illustrate their point in regard to management’s cognizance, or lack thereof, of culture when it comes to cordial service and guest satisfaction. Even more apropos is the tale of the Palace Hotel, “…one of the grande dames of hospitality constructed in the boom years of the 1920s in a mid-sized Midwestern city in the United States.” The authors relate what transpired during its takeover in mid-1980 by a U.S.-based international hotel corporation. The story makes for an interesting and informative case study.

Liquidity, governance and adverse selection in asset pricing

A plethora of recent literature on asset pricing provides plenty of empirical evidence on the importance of liquidity, governance and adverse selection of equity on pricing of assets together with more traditional factors such as market beta and the Fama-French factors. However, literature has usually stressed that these factors are priced individually. In this dissertation we argue that these factors may be related to each other, hence not only individual but also joint tests of their significance is called for. ^ In the three related essays, we examine the liquidity premium in the context of the finer three-digit SIC industry classification, joint importance of liquidity and governance factors as well as governance and adverse selection. Recent studies by Core, Guay and Rusticus (2006) and Ben-Rephael, Kadan and Wohl (2010) find that governance and liquidity premiums are dwindling in the last few years. One reason could be that liquidity is very unevenly distributed across industries. This could affect the interpretation of prior liquidity studies. Thus, in the first chapter we analyze the relation of industry clustering and liquidity risk following a finer industry classification suggested by Johnson, Moorman and Sorescu (2009). In the second chapter, we examine the dwindling influence of the governance factor if taken simultaneously with liquidity. We argue that this happens since governance characteristics are potentially a proxy for information asymmetry that may be better captured by market liquidity of a company's shares. Hence, we jointly examine both the factors, namely, governance and liquidity - in a series of standard asset pricing tests. Our results reconfirm the importance of governance and liquidity in explaining stock returns thus independently corroborating the findings of Amihud (2002) and Gompers, Ishii and Metrick (2003). Moreover, governance is not subsumed by liquidity. Lastly, we analyze the relation of governance and adverse selection, and again corroborate previous findings of a priced governance factor. Furthermore, we ascertain the importance of microstructure measures in asset pricing by employing Huang and Stoll's (1997) method to extract an adverse selection variable and finding evidence for its explanatory power in four-factor regressions.^

An empirical analysis of the global audit market: International Financial Reporting Standards-related changes and differences within the Big 4 global networks

Ongoing debates within the professional and academic communities have raised a number of questions specific to the international audit market. This dissertation consists of three related essays that address such issues. First, I examine whether the propensity to switch between auditors of different sizes (i.e., Big 4 versus non-Big 4) changes as adoption of International Financial Reporting Standards (IFRS) becomes a more common phenomenon, arguing that smaller auditors have an opportunity to invest in necessary skills and training needed to enter this market. Findings suggest that clients are relatively less (more) likely to switch to (away from) a Big 4 auditor if the client's adoption of IFRS occurs in more recent years. ^ In the second essay, I draw on these inferences and test whether the change in audit fees in the year of IFRS adoption changes over time. As the market becomes less concentrated, larger auditors becomes less able to demand a premium for their services. Consistent with my arguments, results suggest that the change in audit service fees declines over time, although this effect seems concentrated among the Big 4. I also find that this effect is partially attributable to a differential effect of the auditors' experience in pricing audit services related to IFRS based on the period in which adoption occurs. The results of these two essays offer important implications to policy debates on the costs and benefits of IFRS adoption. ^ In the third essay, I differentiate Big 4 auditors into three classifications—Parent firms, Brand Name affiliates, and Local affiliates—and test for differences in audit fee premiums (relative to non-Big 4 auditors) and audit quality. Results suggest that there is significant heterogeneity between the three classifications based on both of these characteristics, which is an important consideration for future research. Overall, this dissertation provides additional insights into a variety of aspects of the global audit market.^

Essays on Exchange Rate Economics

Exchange rate economics has achieved substantial development in the past few decades. Despite extensive research, a large number of unresolved problems remain in the exchange rate debate. This dissertation studied three puzzling issues aiming to improve our understanding of exchange rate behavior. Chapter Two used advanced econometric techniques to model and forecast exchange rate dynamics. Chapter Three and Chapter Four studied issues related to exchange rates using the theory of New Open Economy Macroeconomics. Chapter Two empirically examined the short-run forecastability of nominal exchange rates. It analyzed important empirical regularities in daily exchange rates. Through a series of hypothesis tests, a best-fitting fractionally integrated GARCH model with skewed student-t error distribution was identified. The forecasting performance of the model was compared with that of a random walk model. Results supported the contention that nominal exchange rates seem to be unpredictable over the short run in the sense that the best-fitting model cannot beat the random walk model in forecasting exchange rate movements. Chapter Three assessed the ability of dynamic general-equilibrium sticky-price monetary models to generate volatile foreign exchange risk premia. It developed a tractable two-country model where agents face a cash-in-advance constraint and set prices to the local market; the exogenous money supply process exhibits time-varying volatility. The model yielded approximate closed form solutions for risk premia and real exchange rates. Numerical results provided quantitative evidence that volatile risk premia can endogenously arise in a new open economy macroeconomic model. Thus, the model had potential to rationalize the Uncovered Interest Parity Puzzle. Chapter Four sought to resolve the consumption-real exchange rate anomaly, which refers to the inability of most international macro models to generate negative cross-correlations between real exchange rates and relative consumption across two countries as observed in the data. While maintaining the assumption of complete asset markets, this chapter introduced endogenously segmented asset markets into a dynamic sticky-price monetary model. Simulation results showed that such a model could replicate the stylized fact that real exchange rates tend to move in an opposite direction with respect to relative consumption.

Three Essays on Asset Pricing

In this dissertation, I investigate three related topics on asset pricing: the consumption-based asset pricing under long-run risks and fat tails, the pricing of VIX (CBOE Volatility Index) options and the market price of risk embedded in stock returns and stock options. These three topics are fully explored in Chapter II through IV. Chapter V summarizes the main conclusions. In Chapter II, I explore the effects of fat tails on the equilibrium implications of the long run risks model of asset pricing by introducing innovations with dampened power law to consumption and dividends growth processes. I estimate the structural parameters of the proposed model by maximum likelihood. I find that the stochastic volatility model with fat tails can, without resorting to high risk aversion, generate implied risk premium, expected risk free rate and their volatilities comparable to the magnitudes observed in data. In Chapter III, I examine the pricing performance of VIX option models. The contention that simpler-is-better is supported by the empirical evidence using actual VIX option market data. I find that no model has small pricing errors over the entire range of strike prices and times to expiration. In general, Whaley’s Black-like option model produces the best overall results, supporting the simpler-is-better contention. However, the Whaley model does under/overprice out-of-the-money call/put VIX options, which is contrary to the behavior of stock index option pricing models. In Chapter IV, I explore risk pricing through a model of time-changed Lévy processes based on the joint evidence from individual stock options and underlying stocks. I specify a pricing kernel that prices idiosyncratic and systematic risks. This approach to examining risk premia on stocks deviates from existing studies. The empirical results show that the market pays positive premia for idiosyncratic and market jump-diffusion risk, and idiosyncratic volatility risk. However, there is no consensus on the premium for market volatility risk. It can be positive or negative. The positive premium on idiosyncratic risk runs contrary to the implications of traditional capital asset pricing theory.

Financing infrastructure development : time to unshackle the bonds?

The authors would like to thank the RICS for their financial support of the project and the numerous respondents who gave so freely of their time. Part of the research was supported by a grant from the Hong Kong-Scotland Partners in Post-Doctoral Research Scheme sponsored by the Research Grants Council of Hong Kong and the Scottish Government (S-HKU701/13).

Jour de fête!

Travail créatif / Creative Work

Consolidação de processos chave do sistema de gestão da qualidade (da empresa Dário Albano Zina Pimpão Lda – Ginja de Óbidos Oppidum)

A Dário Albano Zina Pimpão Lda é uma pequena empresa familiar constituída em 1985 que fabrica artesanalmente produtos genuínos, de qualidade premium. A gerência da empresa é partilhada por Dário Pimpão (Pai) e Marta Pimpão (Filha), em que Dário Pimpão assume a responsabilidade pela área produtiva, sendo o líder carismático da organização, e Marta Pimpão movimenta-se nas restantes áreas (comercial, financeira, marketing). Produz licor de ginja de Óbidos Oppidum (com e sem elas – ou seja, com ou sem fruto) de forma artesanal e 100% natural, licor de ginja com chocolate e bombons com licor de ginja. O seu know-how faz com que estes produtos sejam de elevada qualidade, considerado um licor gourmet e de categoria premium. O mercado consumidor dos produtos da DAZP é abrangente a homens e mulheres, embora se observe uma maior adesão por parte das mulheres, talvez pelo facto de o licor ser doce e bastante frutado. O facto do licor de ginja Oppidum ser considerado um produto premium faz com que classes médias altas/altas tenham maior apetência para o adquirir, assim como idades entre 30 – 70 anos. Depois de anos consecutivos com taxas de crescimento positivas e crescentes, a Oppidum enfrenta agora a necessidade de uma maior consolidação do mercado interno, em Portugal. Com as atuais condições económicas e financeiras cada vez mais desfavoráveis para todos os agentes económicos portugueses no geral, e também para os consumidores, a Oppidum defronta-se com o desafio de desenvolver novas estratégias que façam face às novas tendências de mercado advindas destas alterações. Para além disso, a procura por parte de consumidores estrangeiros remete para a ideia de que a Oppidum tem potencial e atingiu uma posição em que a sua internacionalização e exportação poderá ser uma mais-valia para a empresa e o próximo passo para o seu desenvolvimento e crescimento. Este projeto trata precisamente da abordagem destas duas novas vertentes da marca Oppidum: consolidação do mercado interno e processo de internacionalização, começando por apresentar uma análise da situação atual da empresa, de modo a que posteriormente se possa definir como quer estar no futuro e enumerar as ferramentas precisas para alcançar as suas metas e objetivos. Pretende-se também definir os próximos passos, quer a nível operacional, financeiro ou estratégico, através de um cronograma de forma a garantir o sucesso da realização deste projeto com a entrada do Licor de Ginja Oppidum no mercado EUA durante o ano 2016. Para concluir, serão realizadas também decisões económicas e financeiras inerentes à expansão internacional e consolidação do mercado interno, indicando-se os pressupostos utilizados para a previsão de receitas nacionais e internacionais assim como também todos os custos associados ao projeto, fundamentando as estimativas de vendas.

Essays in Macro Finance

I study the link between capital markets and sources of macroeconomic risk. In chapter 1 I show that expected inflation risk is priced in the cross section of stock returns even after controlling for cash flow growth and volatility risks. Motivated by this evidence I study a long run risk model with a built-in inflation non-neutrality channel that allows me to decompose the real stochastic discount factor into news about current and expected cash flow growth, news about expected inflation and news about volatility. The model can successfully price a broad menu of assets and provides a setting for analyzing cross sectional variation in expected inflation risk premium. For industries like retail and durable goods inflation risk can account for nearly a third of the overall risk premium while the energy industry and a broad commodity index act like inflation hedges. Nominal bonds are exposed to expected inflation risk and have inflation premiums that increase with bond maturity. The price of expected inflation risk was very high during the 70's and 80's, but has come down a lot since being very close to zero over the past decade. On average, the expected inflation price of risk is negative, consistent with the view that periods of high inflation represent a "bad" state of the world and are associated with low economic growth and poor stock market performance. In chapter 2 I look at the way capital markets react to predetermined macroeconomic announcements. I document significantly higher excess returns on the US stock market on macro release dates as compared to days when no macroeconomic news hit the market. Almost the entire equity premium since 1997 is being realized on days when macroeconomic news are released. At high frequency, there is a pattern of returns increasing in the hours prior to the pre-determined announcement time, peaking around the time of the announcement and dropping thereafter.

Race, Power and Economic Extraction in Benton Harbor, MI

My dissertation investigates twin financial interventions—urban development and emergency management—in a single small town. Once a thriving city drawing blacks as blue-collar workers during the Great Migration, Benton Harbor, Michigan has suffered from waves of out-migration, debt, and alleged poor management. Benton Harbor’s emphasis on high-end economic development to attract white-collar workers and tourism, amidst the poverty, unemployment, and disenfranchisement of black residents, highlights an extreme case of American urban inequality. At the same time, many bystanders and representative observers argue that this urban redevelopment scheme and the city’s takeover by the state represent Benton Harbor residents’ only hope for a better life. I interviewed 44 key players and observers in local politics and development, attended 20 public meetings, conducted three months of observations, and collected extensive archival data. Examining Benton Harbor’s time under emergency management and its luxury golf course development as two exemplars of a larger relationship, I find that the top-down processes allegedly intended to alleviate Benton Harbor’s inequality actually reproduce and deepen the city’s problems. I propose that the beneficiaries of both plans constitute a white urban regime active in Benton Harbor. I show how the white urban regime serves its interests by operating an extraction machine in the city, which serves to reproduce local poverty and wealth by directing resources toward the white urban regime and away from the city.

Jour de fête!

Travail créatif / Creative Work

This Time is Different: Causes and Consequences of British Banking Instability over the Long Run

This paper addresses three questions: (1) How severe were the episodes of banking instability
experienced by the UK over the past two centuries? (2) What have been the macroeconomic
indicators of UK banking instability? and (3) What have been the consequences of UK banking
instability for the cost of credit? Using a unique dataset of bank share prices from 1830 to 2010
to assess the stability of the UK banking system, we find that banking instability has grown more
severe since the 1970s. We also find that interest rates, inflation, lending growth, and equity
prices are consistent macroeconomic indicators of UK banking instability over the long run.
Furthermore, utilising a unique dataset of corporate-bond yields for the period 1860 to 2010, we
find that there is a significant long-run relationship between banking instability and the creditrisk
premium faced by businesses.

German consumers' attitudes and preferences with regard to organic food and food from different origins

In dieser Studie geht es darum, ein umfassendes Bild bezüglich der Konsumenteneinstellungen, Präferenzen und Zahlungsbereitschaften für ökologisch produzierte Lebensmittel und Lebensmittel verschiedener Herkünfte in Deutschland zu erhalten. Obwohl die regionale Herkunft von Lebensmitteln nicht offiziell und einheitlich geregelt ist und keiner Zertifizierung unterliegt wie die ökologische Produktion von Lebensmitteln, zeigen nationale und internationale Studien gleichermaßen, dass Konsumenten bereit sind, mehr für regionale als für ökologisch produzierte Lebensmittel zu bezahlen. Zur Erreichung des Forschungsziels wurde ein Kaufexperiment in Kombination mit einer Konsumentenbefragung, bestehend aus Fragen zum generellen Einkaufsverhalten, zu Einstellungen gegenüber regionalen und ökologisch produzierten Lebensmitteln und zu soziodemographischen Informationen durchgeführt. Im Kaufexperiment wurden die Attribute Produktherkunft, Produktionsweise und Preis anhand vier verschiedener Produkte (Äpfel, Butter, Mehl und Steaks) untersucht. Die Befragung, einschließlich des Experimentes, war durch Interviewer eines Marktforschungsinstituts initiiert, computergestützt und von den Konsumenten selbständig zu erledigen. Das Ziel war es 80 Konsumenten in jedem der acht Befragungsorte in verschiedenen Regionen Deutschlands zu befragen. Zur Auswertung des Experiments wurden RPL-Modell geschätzt, die die Konsumentenpräferenzen für die zu untersuchenden Produktattribute aufzeigen und die Berechnung von Zahlungsbereitschaften ermöglichen. Für die Gesamtheit der Konsumenten war die regionale Herkunft von Lebensmitteln wichtiger als die ökologische Produktion. Außerdem wurden Produktalternativen, die aus der Region stammen, immer stärker präferiert als Produkte aus Deutschland, aus einem Nachbarland und einem außereuropäischen Land. Weiterhin zeigte die Studie, dass Konsumentenpräferenzen produkt- und regionsspezifisch sind. Folglich wird empfohlen, in zukünftigen Studien unterschiedlich Produkte bzw. Produktgruppen und Konsumenten verschiedener Regionen einzubeziehen. Die zunehmenden Präferenzen und Zahlungsbereitschaften der Konsumenten für regionale Lebensmittel deuteten sowohl in dieser Dissertation als auch in vielen anderen nationalen und internationalen Studien darauf hin, dass es ein großes Potential für einen regionalen Lebensmittelmarkt gibt. Aus diesem Grund wird Produzenten und Vermarktern von ökologischen sowie konventionellen Produkten empfohlen, verstärkt in die Entwicklung von regionalen Versorgungsketten zu investieren.

Responsabilidade Social Interna e Motivação no Trabalho

Este estudo teve como primeiro dos seus objectivos conhecer as percepções de um grupo de trabalhadores acerca de algumas políticas e de algumas práticas de responsabilidade social interna, nomeadamente, da formação oferecida pela empresa, da capacidade que esta tem de fomentar a sua autonomia e a sua iniciativa, das práticas de comunicação existentes na empresa, do equilíbrio que esta proporciona entre a sua vida profissional e a sua vida familiar, dos planos de saúde, segurança e apoio social por ela disponibilizados, da diversidade de mão-de-obra, da(des)igualdade em termos de remuneração e perspectivas de carreira entre homens e mulheres, dos esquemas de atribuição de prémios, da segurança dos postos de trabalho, da preocupação da empresa com a sua empregabilidade futura e, finalmente, da(in)existência de práticas discriminatórias. Procurou também alcançar dois outros objectivos, ou seja, descobrir se as percepções dos trabalhadores relativamente às políticas e às práticas acima descritas exercem ou não algum tipo de influência sobre a sua motivação no trabalho e perceber qual o papel que a antiguidade dos trabalhadores desempenha nesta relação. Após a apresentação e a análise de várias perspectivas históricas acerca da responsabilidade social das empresas surgidas a partir da década de 50 e de algumas das teorias da motivação que foram aparecendo ao longo do mesmo espaço de tempo, esta dissertação expôs um caso de estudo de 75 trabalhadores de uma empresa nacional de distribuição alimentar. Através dos dados recolhidos da aplicação de um questionário, este estudo explorou a relação entre as suas percepções acerca das políticas e das práticas de responsabilidade social interna em vigor na empresa e a sua motivação e qual o papel da sua antiguidade nesta relação. Os resultados obtidos mostram que a maioria dos trabalhadores inquiridos apresenta uma percepção positiva relativamente às políticas e às práticas de responsabilidade social interna da sua empresa, à excepção do que se refere aos planos de saúde, segurança e apoio social por ela disponibilizados e à sua preocupação com a empregabilidade futura dos seus trabalhadores, e permitem concluir que as percepções positivas têm maior impacto sobre a motivação no trabalho, à excepção do que diz respeito à percepção do equilíbrio entre a vida profissional e a vida familiar proporcionado pela empresa. Conclui-se também que o papel da antiguidade na relação entre percepções das políticas e das práticas de responsabilidade social interna e motivação no trabalho é insignificante. / The primary objective of this study was to learn about the perceptions held by a group of workers concerning some of their company's policies and practices relative to internal social responsibility, in particular, any training offered by the firm, and its role in improving autonomy and initiative. Also of interest were the methods of communication within the firm, the balance provided between the professional and personal lives of personnel, and health, security and social support available to them. The study considered as well the diversity of the workforce, equality (or inequality) of remuneration, and career prospects between men and women, premium allocation schemes, job security, the company's concern for employability, and the existence (or not) of discriminatory practices. Secondary objectives were to discover if the perceptions of workers concerning the policies and practices mentioned above have (or not) any influence on their motivation at work, and to determine any effect of the length of service on this. Opinions were gathered by means of a questionnaire. After the presentation and analysis of various historical perspectives concerning corporate social responsibility from the 1950s onwards and of some of the motivation theories that appeared along the same period of time, this study examines the case of 75 employees of a national company in the food distribution business. The results of the afore-mentioned questionnaire show that the majority of those questioned has a positive attitude towards the policies and practices of their company's internal social responsibility, except concerning health-care, security and social support, and the firm's interest in their future careers, and lead to the conclusion that a positive perception has a greater impact on the workers' motivation. However, they are critical of the importance given by their employer to their personal lives. This study also concludes that length of service has insignificant impact on the perceptions of workers concerning their company's policies and practices relative to internal social responsibility, and on worker motivation.