Effects of restaurant franchising: Does an optimal franchise proportion exist?

Franchising has significantly affected the US economy, contributing to a rapid growth of its retail sales. To identify whether franchising influences a restaurant firm's financial performance, this study investigated (1) the profitability and intangible values of both franchise and non-franchise restaurant firms and (2) the effect of the combination of franchised and company-owned outlets of restaurant firms (i.e., franchise proportion). The results of this study showed that (1) franchise firms had significantly higher profitability than non-franchise firms and (2) the relationships between franchise proportion and firm profitability and intangible value were curvilinear (inverted U-shape), verifying the existence of an optimal franchise proportion. The results propose a possibility that restaurant franchisors could maximize their profitability and intangible value with an optimal franchise proportion when other variables held constant, implying that it is important to pay attention to the franchise proportion together with other management strategies.     

Low cost carriers’ destination selection using a Delphi method

Over the past two decades, demand for air transport between Taiwan and China has grown rapidly, partly in response to the economic development of the two countries, but also as a result of political factors. Low cost carriers (LCC) that have operated for several decades in the United States and Europe will provide a good operational benchmark for direct cross-strait flights once these services become possible. This research involves the construction of a sequential destination selection model for direct cross-strait flights by LCC based on a multi-attribute value function. The selection framework comprises three elements: destination competitiveness, airport infrastructure and potential demand. Previous research focused only on a few alternative airports, but the 41 airports available for foreign flights in Mainland China have all been included in the empirical analysis undertaken in this paper. The results therefore fit better with the operational features of LCC who are normally seeking suitable secondary airports rather than traffic hubs. The analysis reveals that six airports would be suitable for LCC, namely, Shanghai Pudong, Shenzhen, Xiamen, Hangzhou, Wuhan and Nanjing.     

Advertising expenditure,intangible value and risk: A study of restaurant companies

This study investigates the relationships between advertising expenditure, intangible value, and risk in stock returns of restaurant firms between 2000 and 2005. Tobin's Q was used to examine intangible value, and the variance of common stock return was used to measure the investment risk. The results indicate that the level of advertising expenditure has a significant positive effect on the intangible value of the firm, suggesting that advertising expenditures could help generate intangible value in restaurant firms. However, this study did not support a significant relationship between the advertising expenditure level and the stock return risk of restaurant firms.     

The impact of IAS 39 on the risk-relevance of earnings volatility: Evidence from foreign banks cross-listed in the USA

We examine the impact of adopting International Accounting Standard 39 – Financial Instruments: Recognition and Measurement (IAS 39) by non-US commercial banks cross-listed in the US on earnings volatility and its risk relevance. As IAS 39 requires the recognition of unrealized fair-value gains and losses for a larger set of financial and derivative-financial instruments, and the impairment charges for loans and receivables, we expect and find that IAS 39 adoption increased earnings volatility in IFRS-adopting firms from 2005 onwards. Furthermore, both hedge accounting and the fair value option under IAS 39 are designed to reduce mixed-measurement volatility and to improve the sensitivity of firm risk measures to earnings volatility. We also find that the relationship between credit ratings (proxy for risk) and earnings volatility increases for IFRS-adopting firms after 2005. The evidence is consistent with the argument that IAS 39 increases the credit relevance of earnings volatility.     

Book-tax differences,CEO overconfidence,and bank loan contracting

Review of Quantitative Finance and Accounting - We assess information embedded in the difference between the reported book income and the taxable income (the book-tax difference, BTD hereafter)...     

Top management team characteristics,R&;D investment and capital structure in the IT industry

This paper is based on agency theory, resource-based and upper-echelons perspectives to examine the relationship between R&D investment and capital structure and the moderating effects of top management team (TMT) characteristics on the financing decisions of R&D investment in small and medium enterprises (SMEs). Using data for SMEs in Taiwan’s IT industry, we find that (1) SMEs involved in R&D activities tend to have lower debt levels and (2) TMT characteristics exert considerable influence on the R&D investment-financial leverage relationship in SMEs. One important implication of the empirical evidence is that for SMEs trying to compete on the basis of innovation, the TMT characteristics significantly influence financing decisions. As innovative activities increase, the selection and development of top executives, who are responsible for choosing an optimal capital structure that could keep financial costs low while providing sufficient financial resources for maintaining a continuous, uninterrupted rate of R&D, is crucial for SMEs.     

Website attributes that increase consumer purchase intention: A conjoint analysis

Prior studies investigate factors that affect consumer preferences in online shopping websites. However, prior studies, due to their methodological limitations, do not thoroughly investigate consumer preference structures that reflect the relative importance of attributes and features of shopping websites. By synthesizing prior literature, this research proposes and investigates a comprehensive list of attributes and features of shopping websites that increase consumer purchase intention. This research used IT-based platforms for data collection, and collected data from university students. Data analysis enabled us to categorize consumers that use online shopping websites into three groups based on the attributes they prefer. Consumers with different levels of computer expertise also showed differing preference structures. This research has implications in both research and practice.     

The Real Effects of Real Earnings Management: Evidence from Innovation

We examine the consequences of real earnings management from an innovation perspective and investigate the patent output of firms likely to be managing earnings through altering their R&D expenditures. We find that R&D cuts related to earnings management lead to fewer patents, less influential patent output, and lower innovative efficiency compared to other R&D cuts. Our results thus suggest that real earnings management may obstruct firms’ technological progress and highlight the potential costs of managerial manipulation of R&D expenditures to alter reported earnings.     

An investigation of fatigue issues on different flight operations

The influence of various kinds of flight operations on pilot fatigue remains a chronic problem which has a bearing on flight safety. In this study we sampled flight crews from six airlines in Taiwan, asking them to report on their perceptions of both physical and mental fatigue, before and after flight duty. The data were then analyzed with paired t-test and ANOVA. Our research results confirm findings obtained in other studies, namely, that perceived fatigue levels increase after flight duty, with that of oceanic crews being greater than that of crews serving either regional or short-haul operations. A majority of the pilots surveyed reported feeling fatigued or even nodding-off during long-distance flights, and consequently were in favor of a program of scheduled cockpit napping. While these findings are preliminary, they offer valuable information to aviation regulators and airlines regarding the assigning of consecutively scheduled flights to the same aircrews.