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Determinants of Systematic Risk in the Online Travel Agency Industry

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  • Won Seok Lee

    (Department of Convention Management, Kyung Hee University, 26, Kyungheedae-ro, Dongdaemun-gu, Seoul, 130-701, Korea)

  • Joonho Moon
  • Seoki Lee
  • Deborah Kerstetter

Abstract

Systematic risk, or the variance of asset returns that cannot be eliminated through diversification of a portfolio, has received limited attention from tourism researchers. This is problematic given the dramatic changes experienced by the industry in the last two decades and the fact that there are unique determinants of systematic risk owing to the tourism industry's idiosyncratic business environment. Therefore, the primary purpose of this study is to identify financial/operating determinants that influence systematic risk for online travel agencies (OTAs). Panel data from 10 US OTA companies listed on the New York Stock Exchange Index from 2001 through 2010 were analysed via a two-way, random-effects model using generalized least squares. The results indicate that advertising expenditures, liquidity and firm size are significant determinants of the systematic risk of OTAs. Appropriate financial/operating management for all three determinants are recommended to decrease that risk. This investigation of OTAs' systematic risk provides practical insights to the OTA industry.

Suggested Citation

  • Won Seok Lee & Joonho Moon & Seoki Lee & Deborah Kerstetter, 2015. "Determinants of Systematic Risk in the Online Travel Agency Industry," Tourism Economics, , vol. 21(2), pages 341-355, April.
    • Handle: RePEc:sae:toueco:v:21:y:2015:i:2:p:341-355
    DOI: 10.5367/te.2013.0348
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    References listed on IDEAS

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    Cited by:

    1. Rafiqul Bhuyan & André Varella Mollick & Md Ruhul Amin, 2022. "Systematic and Idiosyncratic Risks of the U.S. Airline Industry," JRFM, MDPI, vol. 15(8), pages 1-13, August.
    2. Muhammad Nasir Sharif & Kashif Hamid & Muhammad Usman Khurram & Muhammad Zulfiqar, 2016. "Factors Effecting Systematic Risk in Isolation vs. Pooled Estimation: Empirical Evidence from Banking, Insurance, and Non-Financial Sectors of Pakistan," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 6(4), pages 287-300, October.

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