Open AccessEarnings Management in Hospitality Firms
Author(s) -
Rui Costa,
Jorge Mota
Publication year - 2021
Publication title -
tourism
Language(s) - English
Resource type - Journals
eISSN - 1849-1545
pISSN - 1332-7461
DOI - 10.37741/t.69.4.7
Subject(s) - portuguese , tourism , business , earnings management , accrual , order (exchange) , hospitality , estimation , accounting , earnings , debt , hospitality management studies , empirical evidence , finance , economics , geography , philosophy , linguistics , archaeology , management , epistemology
This study examines whether Portuguese hotel sectorfirms engage in earnings management (EM) practices to provide specificaccounting results and test the main determinants in explaining EM. We use the SABIdatabase to collect panel data regarding 1615 Portuguese SME hotels from2006–2013. In order to obtain results, a graphical representation of thedistribution of the net income and the estimation of the discretionary accrualswere used, from which two estimation models were formulated. The results obtained provideempirical evidence that firms in the Portuguese hotel sector seem to engage in earningsmanagement practices and that the main determinants behind them appear to bedebt level, return on assets, and firm size. The adoption of earningsmanagement practices by firms is a widespread phenomenon across various sectorsand nations. Yet, despite the general awareness regarding the importance of thetourism sector for communities at a financial, social, and cultural level, thelack of empirical studies with application to the accommodation sector makes itpertinent to investigate this phenomenon.