Examining Ownership Equity as a Psychological Factor on Tourism Business Failure Forecasting

Front Psychol. 2020 Jan 29;10:3048. doi: 10.3389/fpsyg.2019.03048. eCollection 2019.

Abstract

This paper examines ownership equity as a predictor of future business failure within the tourism and hospitality sectors. The main goals of this study were to examine which ratios are the most important for a tourism business failure forecasting model and how significant is the "total percentage of equity ownership by company directors" ratio compared with other ratios associated with the probability of bankruptcy. A stepwise weight assessment ratio analysis (SWARA) was applied, and 12 tourism bankruptcy experts evaluated key ratios. Total percentage of equity ownership by company directors is considered a psychological factor, and it was identified as the fourth most important ratio for a business failure forecasting model. Academicians and practitioners can use the findings of this study whenever developing a forecasting model for tourism and hospitality enterprises.

Keywords: business failure; equity; psychological factors; stepwise weight assessment ratio analysis; tourism and hospitality.