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Business strategies and financial reporting complexity in hospitality firms

Author

Listed:
  • Cédric Poretti
  • Tiphaine Jérôme

    (CERAG - Centre d'études et de recherches appliquées à la gestion - UGA - Université Grenoble Alpes)

  • Cindy Yoonjoung Heo

Abstract

This study investigates the impact of the asset-light and fee-oriented (ALFO) strategy on the auditors' assessment of financial reporting complexity. To do so, we adopt an integrated mixed method design. First, from semi-structured interviews with audit experts active in the hospitality industry, we identify the proposition that the ALFO strategy induces incremental financial reporting complexity leading external auditors to set higher audit fees. Then, the association between the extent of asset-lightness and audit fees is empirically tested on a sample of global hospitality companies over the 2010–2019 period. The results confirm an inverted U-shaped association. Study findings are of interest to hospitality firms' investors, board members, and executives as they provide fresh insight into an under-investigated consequence of the ALFO strategy and reveal the conditions preserving accounting information quality in an increasingly complex environment.

Suggested Citation

  • Cédric Poretti & Tiphaine Jérôme & Cindy Yoonjoung Heo, 2023. "Business strategies and financial reporting complexity in hospitality firms," Post-Print hal-04478581, HAL.
    • Handle: RePEc:hal:journl:hal-04478581
    DOI: 10.1016/j.ijhm.2023.103429
    as

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