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

 
2007 Annual International CHRIE Conference & Exposition 
440
Derivatives such as interest rate swaps or interest rate caps are more efficient in reducing short-term risk exposure of 
lodging firms. The key benefit comes from a reduction in the volatility in cash flows and earnings so firms have 
sufficient cash flows available to make value enhancing investments (Froot et al., 1993). 
A major drawback of this study is the sample size which is a limited by the number of publicly traded 
lodging firms. Including restaurant firms provide one possibility to increase the sample size. Further extensions of 
this paper will include an investigation of the relation between the choice of debt structure and derivative position to 
determine why lodging firms use interest rate swaps and how these instruments and other determinants influence the 
choice of debt structure. In this regard, the research will also determine whether firms hedge exposure from their 
assets or liabilities.