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

Table 1. 
Number of Acquisition Deals in Hospitality Industry
 

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2007 Annual International CHRIE Conference & Exposition 
281
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash Financing and Growth Opportunities 
For firms with a significant number of positive NPV projects, cash holdings tend to increase as the number 
of strong growth opportunities grows (Opler, Pinkowitz, Stulz & Williamson 1999). If firms with many positive 
NPV investment opportunities confront a cash shortage, they may have to forgo some of those positive NPV 
projects. Hence, there is a strong incentive for hospitality firms with strong growth opportunities to hold significant 
cash balances to provide the flexibility to pursue positive NPV investments even in the face of capital market-
rationing.
This may have the effect of such firms using stock financing in acquisitions to conserve cash for their 
growth opportunities (Martin 1996).