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Determinants of Earnings Benchmarks in the Spanish Hotel Industry

Author

Listed:
  • Laura Parte Esteban

    (Spanish National University for Distance Education (UNED), Faculty of Economics and Management, Department of Business and Accounting, Paseo Senda del Rey 11, 28040 Madrid, Spain)

  • María Jesús Such Devesa

    (Department of Statistics, Economic Structure and International Economic Organization, Faculty of Economics and Management, University of Alcala, Antiguo Colegio de Mínimos, Plaza de la Victoria 2, 28802 Alcalá de Henares, Madrid, Spain)

Abstract

This paper focuses on an avoidance of earnings decreases and losses hypothesis in the Spanish hotel industry. In the first step, the earnings distribution (levels and changes in earnings related to one year against the previous year) is analysed to determine whether there is a discontinuity (that is, a ‘kink’) at the zero point. The methodology used is frequency histograms. The existence of a kink in the earnings distribution is an approximation of earnings management to avoid losses and earnings decreases (Burgstahler and Dichev, 1997). In the second step, the incidence of certain variables in the critical intervals of the frequency distribution (small losses against small profits and small decreases in earnings against small increases in earnings) is tested. In this context, the paper's purpose is to identify a set of variables that determine different behaviour around the benchmarks.

Suggested Citation

  • Laura Parte Esteban & María Jesús Such Devesa, 2011. "Determinants of Earnings Benchmarks in the Spanish Hotel Industry," Tourism Economics, , vol. 17(1), pages 53-72, February.
    • Handle: RePEc:sae:toueco:v:17:y:2011:i:1:p:53-72
    DOI: 10.5367/te.2011.0024
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    References listed on IDEAS

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    5. Dan S. Dhaliwal & Cristi A. Gleason & Lillian F. Mills, 2004. "Last†Chance Earnings Management: Using the Tax Expense to Meet Analysts' Forecasts," Contemporary Accounting Research, John Wiley & Sons, vol. 21(2), pages 431-459, June.
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