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Impact Of Leverage On Financial Information Quality: International Evidence From The Hospitality Industry, Cédric Poretti, Alain Schatt, Tiphaine Jérôme

Journal of Hospitality Financial Management

Earnings are a key firm-performance yardstick for investors. The quality of earnings has fascinated researchers and investors alike, as it may be manipulated by a firm's management. This paper studies the relationship between earnings quality and debt levels of firms in the hospitality sector, using a sample of 642 firms from 26 countries for the 2002-2016 period. Results of this study suggests a generally positive relationship between a firm's leverage and its earnings quality in the hospitality sector, particularly for firms incorporated in countries with stronger investor protection. As such, some interesting implications of the leverage-earnings quality relationship are revealed …