The systematic-risk determinants of the US airline industry

Jin Soo Lee, Soo Cheong (Shawn) Jang

Research output: Journal article publicationJournal articleAcademic researchpeer-review

53 Citations (Scopus)

Abstract

Understanding the risk nature of the airline industry is important in effectively managing the business. This study aims to investigate firm-specific variables as they relate to systematic risk (beta). Findings from 16 airline companies for the period of 1997-2002 indicate that profitability, growth, and safety are negatively associated with the systematic risk, while the debt leverage and firm size are positively related to the risk. The significant relationship of debt leverage, profitability, growth, and safety to the systematic risk is consistent with previous empirical studies, but the positive association of the firm size with the risk is a paradoxical finding as opposed to the relevant finance theory and previous research. This unique finding proposes significant implications for airline executives as well as investors.
Original languageEnglish
Pages (from-to)434-442
Number of pages9
JournalTourism Management
Volume28
Issue number2
DOIs
Publication statusPublished - 1 Apr 2007
Externally publishedYes

Keywords

  • Airline industry
  • Firm-specific variables
  • Systematic risk
  • Systematic-risk determinants

ASJC Scopus subject areas

  • Development
  • Transportation
  • Tourism, Leisure and Hospitality Management
  • Strategy and Management

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