Failure of play on asset disposals and share buybacks: application of game theory in the international hotel market

Bourke, Joseph Gerald, Izadi, Javad ORCID: and Olya, Hossein GT. (2020) Failure of play on asset disposals and share buybacks: application of game theory in the international hotel market. Tourism Management, 77. ISSN 0261-5177

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The principal purpose of this study has been to investigate the impact of an asset disposal strategy, often coupled with share repurchase programs, by international hotel companies on financial performance, earnings stability and share values. Utilising ratio analysis, stock returns and risk-adjusted measures, the study analyses the differences in performance, stability and market valuations between asset light and more capital intensive hotel companies. The findings of the study indicate negligible differences in most accounting measures of earnings growth and stability between asset light hotel companies and traditional hotel companies with significant holdings of owned or leased property. Drawing on game theory, we conclude that international hotel companies dispose of their assets in an effort to manipulate financial markets and make their stocks more attractive to investors and traders. Notwithstanding the absence of significant differentiation in accounting measures of performance fundamentals, market based measures show that hotel groups failed in the aim of manipulating financial markets. This study recommends avoiding playing this game as dual asset light/share repurchase strategy generated superior risk-weighted returns to that of more capital intensive traditional hotel companies across the period of the study.

Item Type: Article
Uncontrolled Keywords: International hotel, Repurchase strategy, Financial performance, Risk-adjusted measures, Market stability
Subjects: Business and finance > Accounting and finance
Hospitality and tourism > Tourism
Hospitality and tourism > Tourism > Tourism management
Depositing User: Camille Regnault
Date Deposited: 23 Sep 2019 08:52
Last Modified: 17 Dec 2020 10:34

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