Investigating the level of financial performance analysis in franchising and managerial ownership within the restaurant industry in the areas of Taiwan
Creators: name: Huang, Shu-Pei
Publisher: name: Zenodo
Year: 2024

description: This research examines the correlation between the shareholding structure and the corporateperformance of public catering companies. As the share of insiders’ shareholding increases,the company’s agency problems can be reduced and the company’s value increased; whilethe investment of legal entities can monitor the performance of the company’s managementtogether with the market investors, reducing agency problems and increasing the company’svalue. However, few studies have examined if and how ownership and performance andDegree of Franchise in Asia are related. In most studies when Return on Assets is used asthe performance variable, the non-direct relationship between insider shareholding ratio andcompany performance is particularly evident. In terms of knowledge contribution, this studyadds Operating Margin Rate to the existing MO model and adds Director hold degree to theexisting DOF model. Manager's relative hold degree and corporation hold degree areanalysed because most chain restaurants in Taiwan are family businesses, their manager isa shareholder or a relative, these will affect the performance of the franchise business.Consequently, add these factors to analyse the Degree of Franchise.This study aims to explore the relationship between the governance of franchise companiesand the operating performance of Taiwan restaurants. Therefore, by studying thecharacteristics of the composition of the board of directors, this research will discuss how toset up internal controls to reduce the company's agency problems. In this study, a sample ofTaiwanese restaurant franchise listed companies from 2016 to 2020 and excludingcompanies with insufficient data and non-compliant sampling standards. A total of 466 firmquarter-year samples were collected from 28 companies, the least square method is used toexplore the possible impact of equity structure and financial factors including ROA and EPSon the operation of the company.Based on undertaking multiple regression analysis, the study’s findings show in terms ofmultiple regression analysis, that there is a positive relationship between corporateshareholding ratio and company performance. In particular, the shareholding of directors andsupervisors is negatively correlated with operating performance. On the one hand, it isrevealed that the company’s directors and supervisors do not seem to perform their duemanagement and supervision functions to affect operating performance. On the other hand,this research article also supports the importance of institutional investors’ shareholdings.

The correlation between stock or shareholding preference and business performance is alsoanalysed and only the manager with director status shareholding degree is negativecorelation, others are positive correlation.This study’s findings are useful for restaurants which are run with franchise systems. It couldprovide directors with the basis for corporate governance on developing the franchise systemand whether hiring managers requires investment in shares. Lastly, the regression resultsalso show the important relationship the roles of shareholding degree between financialratios, such as return on assets (ROA), and earnings per share (EPS). The findings alsoindirectly provide evidence that the Taiwan restaurant industry’s operating performance isreflected in increased levels of assets in recent years.