Renaissance of Creative Accounting Due to the Pandemic: New Patterns Explored by Correspondence Analysis

Roman Blazek, Pavol Durana () and Jakub Michulek
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Roman Blazek: Department of Economics, Faculty of Operation and Economics of Transport and Communications, University of Zilina, Univerzitná 8215/1, 010 26 Zilina, Slovakia
Pavol Durana: Department of Economics, Faculty of Operation and Economics of Transport and Communications, University of Zilina, Univerzitná 8215/1, 010 26 Zilina, Slovakia
Jakub Michulek: Department of Economics, Faculty of Operation and Economics of Transport and Communications, University of Zilina, Univerzitná 8215/1, 010 26 Zilina, Slovakia

Stats, 2023, vol. 6, issue 1, 1-20

Abstract: The COVID-19 outbreak has rapidly affected global economies and the parties involved. There was a need to ensure the sustainability of corporate finance and avoid bankruptcy. The reactions of individuals were not routine, but covered a wide range of approaches to surviving the crisis. A creative way of accounting was also adopted. This study is primarily concerned with the behavior of businesses in the Visegrad Four countries between 2019 and 2021. The pandemic era was the driving force behind the renaissance of manipulation. Thus, the purpose of the article is to explore how the behavior of enterprises changed during the ongoing pandemic. The Beneish model was applied to reveal creative manipulation in the analyzed samples. Its M-score was calculated for 6113 Slovak, 153 Czech, 585 Polish, and 155 Hungarian enterprises. Increasing numbers of handling enterprises were confirmed in the V4 region. The dependency between the size of the enterprise and the occurrence of creative accounting was also proven. However, the structure of manipulators has been changing. Correspondence analysis specifically showed behavioral changes over time. Correspondence maps demonstrate which enterprises already used creative accounting before the pandemic in 2019. Then, it was noted that enterprises were influenced to modify their patterns in 2020 and 2021. The coronavirus pandemic had a significant potency on the use of creative accounting, not only for individual units, but for businesses of all sizes. In addition, the methodology may be applied for the investigation of individual sectors post-COVID.

Keywords: bankruptcy; Beneish model; corporate finance; correspondence analysis; COVID-19 pandemic; creative accounting; Visegrad Group (search for similar items in EconPapers)
JEL-codes: C1 C10 C11 C14 C15 C16 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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