Does asset-light strategy compromise information transparency in hotels?

Abstract

This study examines the impact of asset-light strategies on informed trading in the hotel industry, focusing on how intangible assets influence information asymmetry in financial markets. The empirical application uses a sample of 36,667 observations from U.S. hotel firms and analyzes whether the reliance on intangible resources increases the likelihood of informed trading in options markets. Findings suggest that asset-light models, characterized by reduced ownership of physical assets, increase information asymmetry because of the difficulty of valuing intangible assets, leading to greater opportunities for informed trading, particularly by sophisticated investors. The study contributes to the literature on resource-based view, signaling theory, and information asymmetry by emphasizing the transparency challenges hotels face in conveying the value of intangible assets. From these results, managers should adopt innovative signaling strategies to mitigate risks associated with information asymmetry and optimize their asset-light approach.