Co-alignment between Environment Risk, Corporate Strategy, Capital Structure, and Firm Performance: An Empirical Investigation of Restaurant Firms

The importance of testing the co-alignment model has been emphasized by several researchers in the past. The present study is an attempt to test the model using theories in corporate finance and strategic management, which will also prove the commonalties that exist between these domains of business research. This will help support the arguments of some researchers in the hospitality industry who have stressed the importance of assessing the firm's strategies using concepts in finance. The overall objective of this study is to test the viability of the co-alignment model using strategic management and corporate finance theory. The present study identifies the dimensions and variables using prior research within each of the constructs studied under the management and corporate finance domains, vis-a-vis environment risk, corporate strategy, capital structure and firm performance. The relationship between the constructs and dimensions were tested for the dependencies between them using surrogates used in prior research through a priori hypothesized relationships. The unit of analysis was the corporate level, and hence, the study included corporate level data of restaurant firms. The research design included cross-sectional data of restaurant firms that were averaged across an a priori defined time period. These firms were selected based on certain criteria that helped control for country effects and industry effects. Therefore, the publicly traded firms selected as part of the sample were based in the U.S. serving markets predominantly within the country. The statistical analysis was conducted using cross-sectional regression. Results indicate that a high variance in firm performance is explained by the co-alignment between environment risk, corporate strategy, and capital structure. Furthermore, the hypothesized relationships between variables that represent the constructs hold good while using accrual and cash flow returns as surrogates of firm performance. This key finding provides the base for future research efforts, which could focus on developing the model through the use of surrogates that are used in both strategic management and corporate finance research. Also, the sample could be extended to include privately owned restaurant firms that serve markets within the U.S., which will help improve the generalizability of the co-alignment model.

Name thesis:degree_name

Ph. D.

Level thesis:degree_level

doctoral

Discipline thesis:degree_discipline

Hospitality and Tourism Management

Department dc:contributor.department

Hospitality and Tourism Management

Grantor dc:publisher

Virginia Tech

Year dc:date.issued

2002

Author dc:creator

• Chathoth, Prakash K.

Chair dc:contributor.committeechair

• Olsen, Michael D.

Committee members dc:contributor.committeemember

• Schneller, Meir I.
• Singh, Kusum
• Murrmann, Suzanne K.
• Mihalik, Brian J.

• Co-alignment model
• Firm Performance
• Corporate Strategy
• Capital Structure
• Environment Risk
• Hypotheses Tests
• Regression Analysis
• Restaurant Firms

Statement dc:rights

• In Copyright

Licence dc:rights.uri

• http://rightsstatements.org/vocab/InC/1.0/

Dc Identifier Other

etd-05162002-160231

OAI identifier oai:identifier

oai:vtechworks.lib.vt.edu:10919/27741