The effect of regulatory changes on relationship between earnings management and financial reporting timeliness: The case of COVID-19 pandemic

Šušak, Toni

doi:10.18045/zbefri.2020.2.453

Cited by 9 publications

(6 citation statements)

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“…These findings suggest that earnings management is being practiced by Malaysian construction firms and their managers have incentives to manipulate corporate profitability both up and down for purposes, such as managers' compensation and income tax savings. The findings support the evidence provided by (Xiao & Xi, 2021;Ryu & Chae, 2022;Lassoued & Khanchel, 2021;Ayedh et al, 2019;Liang, 2022;Susak, 2020). The mean of BSIZE 6.9062 suggests that the average number of corporate board members for construction companies listed on Bursa Malaysia is roughly 7.…”

Section: Resultssupporting

confidence: 84%

“…According to further analysis, COVID-19's effects on high financing limits will cause listed businesses to control their earnings to a greater extent. According to research done in Croatia by Susak (2020), changes in the regulatory framework during the extraordinary pandemic circumstances had a statistically significant positive effect on the relationship between earnings management and financial reporting delay, suggesting that financial reporting delays following regulatory changes during the pandemic could be attributed to earnings management activities.…”

Section: Earnings Management and The Covid-19 Pandemicmentioning

confidence: 99%

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The Impact of COVID-19 Pandemic and IFRS Adoption on Earnings Quality: Malaysian Evidence

Abdullah¹,

Zamri²,

Fatzel³

et al. 2022

IJARAFMS

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The coronavirus (COVID-19) pandemic is regarded as the world's most serious health, economic, and social crisis. Therefore, managers play an important role in ensuring the survival of their business, and their discretion in financial reporting during a crisis becomes an interesting area to study. Meanwhile, the adoption of the International Financial Reporting Standard (IFRS) is anticipated to enhance the accuracy of earnings reported in financial statements. As a result, the objective of this study is to investigate the relationship between IFRS adoption and the impact of COVID-19 on earnings quality among Malaysian public listed companies. This study used two measures of earnings management: Accrual Earnings Management (AEM) and Real Earnings Management (REM). The sample of this study covers the period after the implementation of MFRS 111 for Construction companies in the year 2012 until the latest COVID-19 outbreak up to the year 2021. This study discovered that earnings management decreases after the adoption of IFRS, indicating that earnings management activities have been mitigated. However, the results also demonstrate that that earnings management figures are significant during the COVID-19 outbreak. Furthermore, the findings show that board composition and firm characteristics have an impact on firms' decisions to manage their earnings, whether on an accrual or real earnings management basis.

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Section: Resultssupporting

confidence: 84%

Section: Earnings Management and The Covid-19 Pandemicmentioning

confidence: 99%

The Impact of COVID-19 Pandemic and IFRS Adoption on Earnings Quality: Malaysian Evidence

Abdullah¹,

Zamri²,

Fatzel³

et al. 2022

IJARAFMS

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“…Their results align with the perspective that the firms' disclosure timing strategy is influenced by capital-market pressure, political favour and lender concessions. Financial reporting quality related to COVID-19 is tested by Jordan et al (2021), which looks into two types of earnings management in the U.S. setting: financial crisis period (da Silva, 2019;Filip & Raffournier, 2014) by focusing on the global economic shock caused by the COVID-19 pandemic; second, we add to the evidence on financial reporting quality in the COVID-19 period as we employed observations from 29 countries, to add to those single-country setting of the prior studies (Šušak, 2020;Chen et al, 2021;Jordan et al, 2021); and third, our analysis compares pre and during-pandemic periods and employ the perspectives of earnings conservatism and value relevance as an attempt to provide a comprehensive view on corporate financial reporting behaviour due to the financial crisis period. Based on the discussions of the prior studies above, we predict that the COVID-19 pandemic will pose significant challenges impacting earnings quality.…”

Section: Hypotheses Developmentmentioning

confidence: 99%

Financial Reporting Quality During COVID-19 Pandemic: International Evidence

Ismail,

Ariff,

Kamarudin

et al. 2023

AAMJAF

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This paper examines the effect of the COVID-19 pandemic on financial reporting quality proxied by earnings conservatism and value relevance of accounting information. Our final sample consists of 10,510 firm-year observations from 29 countries with a balanced number of 5,255 observations for pandemic and pre-pandemic periods. The results show that during the pandemic, the financial statements of companies with a financial year end of 31 March 2020 have different qualities than those in the pre-pandemic period. Lower earnings conservatism is demonstrated in the pandemic period compared to the pre-pandemic period, supporting the argument that business tends to slow the recognition of bad news as the pandemic starts. The value relevance of accounting information declined in the pandemic period, primarily affected by the reduced value relevance of the book value of equity. The findings of this study can help investors evaluate the quality of accounting information and make smarter investment decisions, especially when most companies are in financial trouble.

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“…Grossi et al (2020) investigated the impact and nature of budgetary responses to the COVID-19 pandemic among United Kingdom public sector financial management. Their study shows that the pandemic period has had the greatest effect on the UK's public finances in 2020-2021. Priede Bergamini et al (2022 emphasise in their study how corporate governance practices can help companies survive during the COVID-19 pandemic.…”

Section: Literature Reviewmentioning

confidence: 99%

The Impact of Corporate Governance Factors and the COVID-19 Pandemic on the Publishing Date of Annual Reports of UK Listed Companies

Alqatamin¹,

Shbeilat²

2022

AFR

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The aim of the current study is to examine the role of corporate governance structure and the COVID-19 pandemic on the issuing date of annual reporting of UK non-financial institutions. The corporate governance factors that were examined are: audit committee; board characteristics; ownership structure. To achieve the study objective, the sample’s data was collected from the financial reporting of companies listed on the London Stock Exchange during the period 2008 to 2021. To examine the effect of COVID -19, the sample was spilt into two groups: before and after 2019. The data collected was analysed by using the panel regression random effect method; the issuing date of annual reporting was measured by counting the number of days that passed between year-end and the date of the issuing of financial reports. The study’s findings show that there is a significant relationship between board size, independency of board, audit independence, audit experience, and the issuing date of annual reports. Moreover, after splitting the study’s sample, the empirical results supported that the COVID -19 pandemic has a negative effect on the corporate governance mechanisms that enhance the issuing date of annual reports. The study extends prior studies with evidence that demonstrates a relationship between issuing date (timeliness) of annual reports and the strength of corporate governance during the COVID-19 pandemic, and consequently, these findings confirm that corporate governance factors and auditing process enhance annual reporting quality.

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The effect of regulatory changes on relationship between earnings management and financial reporting timeliness: The case of COVID-19 pandemic

Cited by 9 publications

References 0 publications

The Impact of COVID-19 Pandemic and IFRS Adoption on Earnings Quality: Malaysian Evidence

The Impact of COVID-19 Pandemic and IFRS Adoption on Earnings Quality: Malaysian Evidence

Financial Reporting Quality During COVID-19 Pandemic: International Evidence

The Impact of Corporate Governance Factors and the COVID-19 Pandemic on the Publishing Date of Annual Reports of UK Listed Companies

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