Earnings Predictability of the Greek Hospitality Industry During the Crisis

The aim of the present research is to explore the issue of earnings predictability of a sample of hospitality firms before and after the burst of financial crisis in the Greek economy in 2011. Earnings predictability is considered as a prominent feature of accounting quality and has several implications for investors. For this reason we utilized a sample of organizations registered on the Greek chamber of commerce during the fiscal years 2004–2007 (pre-crisis period) and 2011–2013 (post-crisis period). Those firms were operating on the hospitality and food services sectors, leading to 343 observations for analysis. Regression analysis pointed out that the cash flow component of earnings is a more significant determinant of future earnings relative to accruals. Also the persistence of the cash flow component of earnings has decreased after the burst of the crisis and this is attributed to the lower levels of earnings predictability during that period. Our study adds to the existing literature on earnings predictability and persistence of the hospitality industry, suggesting fruitful policy indications.