EM during COVID-19
| Research product | EM behaviour | Motivations |
|---|---|---|
| da Silva Flores et al. (2023) | EM increased | Attempts by the companies to postpone the negative effects of the crisis on their balance sheets |
| Garfatta et al. (2023) | Large scale accounting practices during the crisis period allow firms to report positive earnings in the post-crisis period | |
| Liu and Sun (2022) | Significant decline in discretionary accruals from 2019 to 2020 suggest that firms engaged in more income-decreasing EM to take a big bath in reporting earnings in the pandemic year. | |
| Khanchel and Lassoued (2022) | Three factors explain the relationship between CSR and EM: Pressure, opportunity and rationalization | |
| Rahman et al. (2023) | Family owners have an incentive to manage earnings when the company’s performance is poor. The managers of such companies have considered and taken certain measures to survive this sudden and large-scale pandemic | |
| Šušak (2020) | Reporting delays after regulatory changes during the pandemic could be attributed to EM activities. Due to financial difficulties and uncertainty caused by the coronavirus, companies were more inclined to manipulate financial statement items | |
| Taylor et al. (2023) | Banks are inclined to manage earnings during crises to reduce earnings volatility | |
| Yan et al. (2022) | High degree of financial constraints increases EM. So, enterprises in industries and regions where COVID-19 is more severe are more affected by the suspension of work and production caused by the epidemic prevention policies choose accrual-based EM using accounting items rather than carrying out EM through real activities | |
| Ryu and Chae (2022) | Although the distribution industry has enjoyed increased demand because many companies have been expanding their distribution channels, including online sales, companies in the industry have engaged in more EM since the pandemic began because their future prospects remain uncertain as the pandemic dragged on | |
| Yassin et al. (2022) | Some actions provided by governments are deemed as channels for practicing EM, especially concerning the changes in the contracts with customers that companies have entered into under IFRS 15 in line with requirements of the COVID-19, which companies then exploited to practice EM | |
| Ali et al. (2022) | EM decreased | Only firms in the countries that were less adversely affected due to the pandemic tended to engage less in EM practices, while among firms listed in countries that were more adversely affected by the pandemic, EM practices appeared not to be significantly less during the pandemic. These findings are unsurprising, as those firms listed in the most adversely affected countries were expected to engage in more EM practices to mitigate the negative effects of the pandemic on their operating performance and so report better performance, a result that was also in line with prior studies |
| Uddin (2023) | The COVID-19 pandemic had a moderating effect on the relationship between CEO traits and real EM |
| Research product | EM behaviour | Motivations |
|---|---|---|
| EM increased | Attempts by the companies to postpone the negative effects of the crisis on their balance sheets | |
| Large scale accounting practices during the crisis period allow firms to report positive earnings in the post-crisis period | ||
| Significant decline in discretionary accruals from 2019 to 2020 suggest that firms engaged in more income-decreasing EM to take a big bath in reporting earnings in the pandemic year. | ||
| Three factors explain the relationship between CSR and EM: Pressure, opportunity and rationalization | ||
| Family owners have an incentive to manage earnings when the company’s performance is poor. The managers of such companies have considered and taken certain measures to survive this sudden and large-scale pandemic | ||
| Reporting delays after regulatory changes during the pandemic could be attributed to EM activities. Due to financial difficulties and uncertainty caused by the coronavirus, companies were more inclined to manipulate financial statement items | ||
| Banks are inclined to manage earnings during crises to reduce earnings volatility | ||
| High degree of financial constraints increases EM. So, enterprises in industries and regions where COVID-19 is more severe are more affected by the suspension of work and production caused by the epidemic prevention policies choose accrual-based EM using accounting items rather than carrying out EM through real activities | ||
| Although the distribution industry has enjoyed increased demand because many companies have been expanding their distribution channels, including online sales, companies in the industry have engaged in more EM since the pandemic began because their future prospects remain uncertain as the pandemic dragged on | ||
| Some actions provided by governments are deemed as channels for practicing EM, especially concerning the changes in the contracts with customers that companies have entered into under IFRS 15 in line with requirements of the COVID-19, which companies then exploited to practice EM | ||
| EM decreased | Only firms in the countries that were less adversely affected due to the pandemic tended to engage less in EM practices, while among firms listed in countries that were more adversely affected by the pandemic, EM practices appeared not to be significantly less during the pandemic. These findings are unsurprising, as those firms listed in the most adversely affected countries were expected to engage in more EM practices to mitigate the negative effects of the pandemic on their operating performance and so report better performance, a result that was also in line with prior studies | |
| The COVID-19 pandemic had a moderating effect on the relationship between CEO traits and real EM |
Note(s): The table summarizes the findings for the effect on EM produced by the pandemic crisis
Source(s): Table by authors
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