Determinants of Investing in Operating Capacity Decisions Among Tourist Facility Operators Based in Kumasi Metropolis
Keywords:Investing in operating Capacity; decisions; tourist facility operators; Kumasi Metropolis
AbstractDecisions of managers relating to investments made on the operating capacities of firms have become a critically important issue in the corporate life because of their impact on firm’s value, financing source availability, earning potential and related issues. Based on prevailing view(s) in extant literature associating inherent risks and bankruptcy with capital structure of firms, this current study argued that the bankruptcy risks should be traced to inability of firms to invest in adequate operating capacity so as to generate adequate turnover. Apparent lack of much empirical study to integrate investing in operating capacity with all these variables, suggests the need for this study. Based on the foregoing argument, this study integrates resource-based view, internalization and portfolio theories as the theoretical lens to examine the relationship between turnover, financing and cost of finance, and investing in a firm’s operating capacity. The results of this study based on binary regression of data generated from a survey of 100 tourist facility operators revealed that annual turnover, age of the business, financing availability and financing cost together and/or on their own likely to influence tourist facility operators’ decision to invest in their operating capacity. The study’s contributions to previous financing, investment and capital structure literature is well noted.
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