Purpose The purpose of this paper is to study the influence of financial flexibility (FF) on enterprise performance (EP) within Taiwan’s hospitality industry during the COVID-19 shock and explore whether EP varies with hospitality industry characteristics.
Design/methodology/approach Secondary data of 39 Taiwan Stock Exchange-listed hospitality firms were collected from the Taiwan Economic Journal databases. Quantile regression analysis was applied to examine the FF-EP relationship
Findings The results evidence that there is a U-shaped (convex) FF-EP relationship for hospitality firms in the 10th, 25th and 50th Tobin’s Q quantiles and in asset-heavy firms. For asset-light firms, FF has an inverted U-shaped (concave) effect on EP in the 90th Tobin’s Q quantile
Practical implications The empirical results highlight the need for Taiwan’s hospitality industry as a whole to take rolling adjustment and optimization of FF and concentrate on liquidity risk management after the COVID-19 pandemic and for long-term sustainability.
Originality/value To the best of the authors’ knowledge, this study is one of the first to examine the nonlinear FF-EP relationship in the hospitality industry of Taiwan, particularly amid the COVID-19 shock. Moreover, this study extends current literature by revealing the hospitality industry’s FF-EP relationship and highlights the importance of the pandemic crisis context.
Relation:
International Journal of Contemporary Hospitality Management 34(2), p.687-712
