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. 2005 Dec;24(4):493-515.
doi: 10.1016/j.ijhm.2004.10.007. Epub 2004 Dec 22.

Toward a resolution of the cost of equity conundrum in the lodging industry: a conceptual framework

Melih Madanoglu  1 , Michael D Olsen  1
Affiliations

Toward a resolution of the cost of equity conundrum in the lodging industry: a conceptual framework

Melih Madanoglu et al. Int J Hosp Manag. 2005 Dec.

Abstract

The firm value estimate is derived from accounting and finance practices that focus on physical assets as opposed to intangible assets (Arthur Andersen Hospitality Leisure Executive Rep. 5 (1998) 2). The cost of equity estimation models used in firm valuation and capital investment decisions fall short of tapping important constructs to firm value, especially the intangible ones. The purpose of this study is to assess the present cost of equity capital determination models and provide a view of their relevancy for the lodging industry while simultaneously attempting to propose new options to meet the valuation and capital budgeting needs of the lodging industry.

Keywords: Cost of capital; Firm valuation; Intangibles; Lodging industry.

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Figures

Fig. 1
Fig. 1
posited theoretical model: Notes: Hcap=Human Capital; Tech=Technology Utilization and Investment; SSI=Safety and Security Index; BSI=Brand Strength Index; IND=Industry factors; and RP= Risk Premium.
See this image and copyright information in PMC

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