The Covid-19 pandemic and management controls

H. Ho, C. Hofmann and Nina Schwaiger

Publications of Darmstadt Technical University, Institute for Business Studies (BWL) from Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL)

Abstract: We examine how firms respond to the Covid-19 pandemic by adjusting their management controls and what the consequences are in terms of firms’ resilience to the crisis. We review literature that deals with the influence of the Covid-19 pandemic on business and investigate results from a survey conducted within a large international multi-divisional service firm and the German Business Panel. We find evidence consistent with the claim that the Covid-19 pandemic is associated with a shock to transparency and increased incentive problems. We document firms’ adjustments of their management controls in response to the Covid-19 crisis: Action controls are stronger, result controls are more flexible, and cultural controls are weaker. Regarding firms’ resilience, we provide supportive evidence that more resilient firms face a smaller shock to transparency, adjust their management controls to a smaller extent, and are associated with stronger cultural controls in terms of higher organisational trust.

Date: 2023
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Published in Accounting and Business Research 5 (2023) : pp. 583-607

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Persistent link: https://EconPapers.repec.org/RePEc:dar:wpaper:157170

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