Distress Analysis and Risk Score of Hotels: A Longitudinal Study

Distress Analysis and Risk Score of Hotels: A Longitudinal Study

Vilas G. Waikar (Cass Business School, City, University of London, India) and Sigfred Fernandes (Goa University, India)
Copyright: © 2020 |Pages: 14
DOI: 10.4018/IJRCM.2020070101

Abstract

This article is first study of a service firm's risk/risk management score and Zeta function, particularly . analysis how risk disclosure and financial performance varies longitudinally. Using mix methodology, research uses Z score-discriminant function Z_I= ∑_(i=1)^n〖β_i X_i 〗 Z, X -specific to hotel industry and the risk scores, extracted from analysis of formal disclosures from annual reports . This article identifies that risk and risk management practices differ across hotel formats. The analysis of Z scores and risk disclosures reveals the association between these variables. The international hotels in comparison to national and local hotels are more distressed and hence have high risk scores confirming awareness of strength of this relation. Local standalone hotels are exhibiting high volatility and exhibit low risk score. This unique relationship between z score and risk disclosures will prove to have sustained relevance to risk academicians and practitioners.
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Literature Review

The research undertaken in the area of risk has been criticized for its methodological pitfall. The question is, should one take an individual or group as unit of analysis for exploring the inquiry pertaining to risk? Risk needs to be defined equally from probability/ expected values and from perspective of events/ uncertainties/consequences (Aven & Renn 2009). Risk needs to be understood from perspectives of a firm. Correct risk prediction needs to be appreciated and understood for its true threat level so that response is effective. Erroneous risk practices may result in more serious issues such as uncontrolled risk aggregation and may have serious cost implications (Sunstein, 2002). Exposure to risks results in financial difficulties which impacts the business strategy. Researchers are looking at Sociology of risks (Korstanje, 2010, 2011a)

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