The Moderating Effect of Product and Brand Diversification on the Relationship between Geographic Diversification and Firm Performance in the Hospitality Industry
AuthorKang, Kyung Ho
Committee memberRoehl, Wesley S.
Plehn-Dujowich, Jose M.
Aaronson, William Edson
DepartmentTourism and Sport
Recreation and Tourism
Permanent link to this recordhttp://hdl.handle.net/20.500.12613/1571
MetadataShow full item record
AbstractIn spite of the prevalence and strategic importance of diversification for US hospitality firms, research on the effects of diversification has been insufficient in the hospitality literature. Especially, examination of the moderating effect of product or brand diversification on the relationship between geographic diversification and performance of US hospitality firms has been lacking in the hospitality field thus far. This study aims to investigate the effect of each diversification strategy on firm performance for US casino, restaurant, and lodging industries. Further, to investigate effects of diversification comprehensively by incorporating interactions between different diversification strategies, this study attempts to examine the moderating effect of product diversification on the relationship between geographic diversification and performance of US casino firms, and the moderating effect of brand diversification on the relationship between geographic diversification and performance of US restaurant and lodging firms. To accomplish study purposes, this study employs fixed effects and fixed effects instrumental variable regressions analyses, which strictly address the endogeneity problem, thereby enhancing causality between diversification and firm performance. The sample of this study consists of 336 observations of 43 casino firms, 176 observations of 36 lodging firms, and 952 observations of 132 restaurant firms over the period 1993-2010. The study's results indicate a positive and significant effect of geographic diversification on firm performance in the US casino and lodging industry, but an insignificant effect of geographic diversification in the US restaurant industry. For the effect of product and brand diversification, the study's analyses show no significant effect of product diversification on firm performance in the US casino industry, a negative and significant effect of brand diversification in the US restaurant industry, and an insignificant effect of brand diversification in the US lodging industry. Regarding moderating effects, while this study finds an insignificant moderating effect of product diversification on the relationship between geographic diversification and firm performance in the US casino industry, the analyses show a negative and significant moderating effect of brand diversification in the US restaurant industry and a positive and significant moderating effect of brand diversification in the US lodging industry. Findings of this study recommend more prudent decision-making for diversification strategies for US casino firms, brand concentration strategies for US restaurant firms, and acceleration of both geographic and brand diversification for US lodging industry. This study fills a research gap in the hospitality literature by exhaustively examining the effect of diversification strategies on firm performance in the hospitality field by providing evidence for the moderating effects of product and brand diversification on the geographic diversification-firm performance relationship in three US hospitality industries. Further, this study enriches the whole body of diversification theory and literature by providing context-specific empirical findings for diversification's effects and investing the moderating role of brand diversification in the diversification strategy context.
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Characterizing lineage-specific evolution and the processes driving genomic diversification in chordatesNorthover, DE; Shank, SD; Liberles, DA; Liberles, David A|0000-0003-3487-8826 (2020-02-11)© 2020 The Author(s). Background: Understanding the origins of genome content has long been a goal of molecular evolution and comparative genomics. By examining genome evolution through the guise of lineage-specific evolution, it is possible to make inferences about the evolutionary events that have given rise to species-specific diversification. Here we characterize the evolutionary trends found in chordate species using The Adaptive Evolution Database (TAED). TAED is a database of phylogenetically indexed gene families designed to detect episodes of directional or diversifying selection across chordates. Gene families within the database have been assessed for lineage-specific estimates of dN/dS and have been reconciled to the chordate species to identify retained duplicates. Gene families have also been mapped to the functional pathways and amino acid changes which occurred on high dN/dS lineages have been mapped to protein structures. Results: An analysis of this exhaustive database has enabled a characterization of the processes of lineage-specific diversification in chordates. A pathway level enrichment analysis of TAED determined that pathways most commonly found to have elevated rates of evolution included those involved in metabolism, immunity, and cell signaling. An analysis of protein fold presence on proteins, after normalizing for frequency in the database, found common folds such as Rossmann folds, Jelly Roll folds, and TIM barrels were overrepresented on proteins most likely to undergo directional selection. A set of gene families which experience increased numbers of duplications within short evolutionary times are associated with pathways involved in metabolism, olfactory reception, and signaling. An analysis of protein secondary structure indicated more relaxed constraint in β-sheets and stronger constraint on alpha Helices, amidst a general preference for substitutions at exposed sites. Lastly a detailed analysis of the ornithine decarboxylase gene family, a key enzyme in the pathway for polyamine synthesis, revealed lineage-specific evolution along the lineage leading to Cetacea through rapid sequence evolution in a duplicate gene with amino acid substitutions causing active site rearrangement. Conclusion: Episodes of lineage-specific evolution are frequent throughout chordate species. Both duplication and directional selection have played large roles in the evolution of the phylum. TAED is a powerful tool for facilitating this understanding of lineage-specific evolution.
Diversification, information asymmetry, cost of capital, and production efficiencyElyasiani, Elyas; Chen, Zhaohui; Mansur, Iqbal; Mao, Connie X.; Pagano, Michael A.; Reeb, David (Temple University. Libraries, 2008)This study examines how diversification changes firms' key characteristics, which consequently alter firms' value. The reason why I focus on this topic is because of the mixed findings in literature about the valuation effect of diversification. This study offers deeper insights to the influence of diversification on important valuation factors that are already identified in finance literature. Specifically, it examines if diversification affects firms' information asymmetry problem, firms' cost of capital and cash flow, and firms' production efficiency. The study looks at both the financial industry and non-financial industry and the chapters are arranged in the following order. Firstly, empirical studies show that investors do not value BHCs' pursuit of non-interest income generating activities and yet these activities have demonstrated a dramatic pace of growth in the recent decades. An interesting question is what factors drive the discontent of the investors with the diversification endeavors of the BHCs in non-interest income activities. The first chapter examines the subject from the view point of information opaqueness, which is unique in the banking industry in terms of its intensity. We propose that increased diversification into non-interest income activities deepens information asymmetry, making BHCs more opaque and curtailing their value, as a result. Two important results are obtained in support of this proposition. First, analysts' forecasts are less accurate and more dispersed for the BHCs with greater diversity of non-interest income activities, indicating that information asymmetry problem is more severe for these BHCs. Second, stock market reactions to earning announcements by these BHCs signaling new information to the market are larger, indicating that more information is revealed to the market by each announcement. These findings indicate that increased diversity of non-interest income activities is associated with more severe information asymmetry between insiders and outsiders and, hence, a lower valuation by shareholder. Secondly, since Lang and Stulz (1994) and Berger and Ofek (1995), corporate literature has taken the position that industrial diversification is associated with a firm value discount. However, the validity and the sources of the diversification discount are still highly debated. In particular, extant studies limit themselves to cash flow effects, totally overlooking the cost of capital as a factor determining firm value. Inspired by Lamont and Polk (2001), the second chapter examines how industrial and international diversification change the conglomerates' cost of capital (equity and debt), and thereby the firm value. Our empirical results, based on a sample of Russell 3000 firms over the 1998-2004 period, show that industrial (international) diversification is associated with a lower (higher) firm cost of capital. These findings also hold for firms fully financed with equity. In addition, international diversification is found to be associated with a lower operating cash flow while industrial diversification doesn't alter it. These results indicate that industrial (international) diversification is associated with firm value enhancement (destruction). Given the fact that the majority of the firms involved in industrial diversification also diversify internationally, failing to separate these two dimensions of diversification may result in mistakenly attributing the diversification discount to industrial diversification. Thirdly, financial conglomerates have been increasingly diversifying their business into banking, securities, and insurance activities, especially after the Gramm-Leach-Bliley Act (GLBA, 1999). The third chapter examines whether bank holding company (BHC) diversification is associated with improvement in production efficiency. By applying the data envelopment analysis (DEA), the Malmquist Index of productivity, and total factor productivity change as a decomposed factor of the index, are calculated for a sample of BHCs over the period 1997-2007. The following results are obtained. First, technical efficiency is negatively associated with activity diversification and the effect is primarily driven by BHCs that did not diversify through Section 20 subsidiaries before GLBA. Second, the degree of change in diversification over time does not affect the total factor productivity change but is negatively associated with technical efficiency change over time. This latter effect is also primarily shown on BHCs that did not have Section 20 subsidiaries before GLBA. Therefore, it can be concluded that diversification is on average associated with lower production efficiency of BHCs, especially those BHCs without first-mover advantage obtained through Section 20 subsidiaries. These chapters explores the possible channels through which diversification could alter firms' valuation. They contribute to the literature by offering further knowledge about the effect of diversification.
Does the International Diversification Discount Vary by Industry and/or Firm Characteristics?Kotabe, Masaaki; Choi, Jongmoo Jay, 1945-; Di Benedetto, C. Anthony; Kopecky, Kenneth J.; Aaronson, William Edson (Temple University. Libraries, 2010)Numerous studies have been undertaken on corporate and international diversification. While most early research indicates the existence of a diversification discount, later research reports mixed results (both premiums and discounts). Recent research has even found a U-shaped, an inverted U-shaped, or an S-shaped relationship between international diversification and performance. This paper suggests a major reason for these mixed results is that the success of international diversification is dependent on specific industry and/or firm characteristics. Therefore, by looking at all firms and industries in aggregate, past diversification studies have been undertaken at too aggregate a level to understand how firm and industry specific issues affect international diversification. This study hypothesizes that the success of international diversification is dependent upon industry and firm specific advantages such as tacit knowledge, information technology capability, marketing capability, and international experience. Industries/firms that possess a significant competitive advantage in one or more of these areas will likely have an international diversification premium, while those that do not will likely have an international diversification discount. The ability of firms to generate a competitive advantage in these areas varies significantly across industries. Therefore, firms in certain industries are likely to have an international diversification premium, while others will likely have an international diversification discount. The findings of this study do indicate that in the 30 industry sectors tested, 18 have an international diversification premium while 12 have an international diversification discount. This suggests that international diversification premiums/discounts by industry to exist. The firm specific advantages of tacit knowledge, information technology capability, and marketing capability were found to be positively correlated with firm performance for international firms, while the results of international experience with firm performance were not significant.