Microsoft Word 2007 ichrie conference Proceedings Final-Final 06-06-07. doc

 
METHODOLOGY 
The sample of hospitality acquiring firms was divided into two groups by the payment type (cash or stock).
Since the dependent variable is the payment type which is a categorical dummy variable and the independent 
variables are metric accounting variables of the firm’s characteristics, binary logistic regression was used (Hair, 
Anderson, Tathan & Black, 1998).
The first independent variable, free cash flow, is calculated by dividing cash and short-term investments by 
total sales (Lang, Stulz & Walkling, 1991). Free cash flow calculations are made over the fiscal year prior to the 
takeover announcement date
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.
The second independent variable, growth opportunities
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, is defined as capital expenditures-to-total sales 
and capital expenditures-to-total assets since growth opportunities for the hospitality industry involve acquisition of 
fixed assets, expansion and renovation (Dalbor & Upneja, 2004).
Firm size (log of the book value of total assets) and the debt ratio (total debt divided by the book value of 
total assets) are used as additional independent variables.