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Plural form business strategy and financial reporting quality in hospitality firms

Author

Listed:
  • Cédric Poretti
  • Tiphaine Jérôme

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

  • Prashant Das

Abstract

This paper analyzes how the plural form business strategy (i.e., simultaneously pursuing a fee-oriented and an equity-based strategy) impacts financial reporting quality of international hospitality firms. Drawing on the agency theory perspective, we analyze a sample of global hospitality companies over 2010–2019 using OLS, entropy balancing, and Heckman two-stage estimations. Our results suggest that greater use of the plural form is positively associated with higher earnings management (i.e., lower financial reporting quality). The plural form induces financial reporting complexity, which increases the likelihood of earnings management. However, the presence of large shareholders, aiming at reducing earnings management practices for reputation purposes, offsets this effect. This study identifies a specific feature of the hospitality industry, namely the pursuit of the plural form business strategy, as triggering more complexity, which results in detrimental lower reporting quality for investors.

Suggested Citation

  • Cédric Poretti & Tiphaine Jérôme & Prashant Das, 2024. "Plural form business strategy and financial reporting quality in hospitality firms," Post-Print hal-04536811, HAL.
    • Handle: RePEc:hal:journl:hal-04536811
    DOI: 10.1016/j.jhtm.2024.03.008
    as

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