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The Relationship between the Use of Hospitality Firms' Financial Derivatives and Cash Flow/Earnings Volatility

Author

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  • Dong Jin Kim

    (Department of Food Technology & Food Service Industry, Yeungnam University, South Korea)

  • Woo Gon Kim

    (Dedman School of Hospitality, College of Business, Florida State University, 288 Champions Way, UCB 4116, Tallahassee, FL 32306, USA)

Abstract

Firms use financial derivative instruments to manage risks. Smoothing cash flows and earnings are an important aspect of financial risk management. This study investigates the use of financial derivatives in the lodging, hotel real-estate investment trusts (REITs) and casino industries. The data for the study were collected from both the Compustat database and firms' Form 10-K filings with the Securities and Exchange Commission (SEC). The findings verify that there are significant differences between financial derivatives users and non-users in terms of financial characteristics, cash flow volatility and earnings volatility.

Suggested Citation

  • Dong Jin Kim & Woo Gon Kim, 2008. "The Relationship between the Use of Hospitality Firms' Financial Derivatives and Cash Flow/Earnings Volatility," Tourism Economics, , vol. 14(3), pages 469-482, September.
    • Handle: RePEc:sae:toueco:v:14:y:2008:i:3:p:469-482
    DOI: 10.5367/000000008785633569
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    References listed on IDEAS

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    1. Geczy, Christopher & Minton, Bernadette A & Schrand, Catherine, 1997. "Why Firms Use Currency Derivatives," Journal of Finance, American Finance Association, vol. 52(4), pages 1323-1354, September.
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    Cited by:

    1. Merkert, Rico & Swidan, Hassan, 2019. "Flying with(out) a safety net: Financial hedging in the airline industry," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 127(C), pages 206-219.
    2. Swidan, Hassan & Merkert, Rico & Kwon, Oh Kang, 2019. "Designing optimal jet fuel hedging strategies for airlines – Why hedging will not always reduce risk exposure," Transportation Research Part A: Policy and Practice, Elsevier, vol. 130(C), pages 20-36.

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