Corporate Governance Factors and Financial Performance of Restaurant Companies
Disciplines
Food and Beverage Management | Hospitality Administration and Management
Abstract (300 words maximum)
The restaurant industry is a major player in the service sector in the United States. The industry sales are predicted to reach 997 billion dollars in 2023. The industry is characterized by a large number of minority managers and owners, a large percentage of single-unit businesses, and numerous chains. For publicly listed restaurant companies, corporate governance issues are critical determinants of firm success. The purpose of this study is to investigate the relationship between corporate governance characteristics and company financial performance. The sample of this study will consist of restaurant companies in Security Codes 5810 and 5812. The observation period will be between 2010 and 2022. The total sample will include around 70 restaurant firms. Data on corporate governance characteristics will be manually obtained from Def 14A (Proxy statements) and SEC annual filings (10-Ks) by a team of researchers. The dependent variables in this study will be firm financial performance measured by Return on Assets and Stock Returns. This study also uses control variables such as company size (number of restaurant stores), liquidity, debt to equity etc. Data for the dependent and control variables will be obtained from the Center for Research in Security Prices (CRSP) and Compustat. Potential independent variables in our study are corporate governance measures such as board diversity, franchising proportion (number of franchised stores to total stores), shareholder rights, etc. The variance in firm financial performance will be captured through multiple regression analysis. This research study expects to find the financial effects of corporate governance characteristics such as board of directors’ independence, franchising proportion, and board diversity on company performance. The results of this study will provide implications for company executives about how to achieve better corporate governance that leads to company success.
Academic department under which the project should be listed
CCOB - Management, Entrepreneurship & Hospitality
Primary Investigator (PI) Name
Melih Madanoglu
Corporate Governance Factors and Financial Performance of Restaurant Companies
The restaurant industry is a major player in the service sector in the United States. The industry sales are predicted to reach 997 billion dollars in 2023. The industry is characterized by a large number of minority managers and owners, a large percentage of single-unit businesses, and numerous chains. For publicly listed restaurant companies, corporate governance issues are critical determinants of firm success. The purpose of this study is to investigate the relationship between corporate governance characteristics and company financial performance. The sample of this study will consist of restaurant companies in Security Codes 5810 and 5812. The observation period will be between 2010 and 2022. The total sample will include around 70 restaurant firms. Data on corporate governance characteristics will be manually obtained from Def 14A (Proxy statements) and SEC annual filings (10-Ks) by a team of researchers. The dependent variables in this study will be firm financial performance measured by Return on Assets and Stock Returns. This study also uses control variables such as company size (number of restaurant stores), liquidity, debt to equity etc. Data for the dependent and control variables will be obtained from the Center for Research in Security Prices (CRSP) and Compustat. Potential independent variables in our study are corporate governance measures such as board diversity, franchising proportion (number of franchised stores to total stores), shareholder rights, etc. The variance in firm financial performance will be captured through multiple regression analysis. This research study expects to find the financial effects of corporate governance characteristics such as board of directors’ independence, franchising proportion, and board diversity on company performance. The results of this study will provide implications for company executives about how to achieve better corporate governance that leads to company success.