Earnings Management in Business Groups during the SARS-CoV-2 Pandemic

Comporek Michał ()
Additional contact information
Comporek Michał: University of Lodz, Faculty of Economics and Sociology, Rewolucji 1905 roku 39, 90-214 Łódź, Poland

Central European Economic Journal, 2024, vol. 11, issue 58, 286-304

Abstract: This paper aims to assess the influence of the SARS-CoV-2 pandemic on the accrual-based earnings management patterns in non-financial business groups in the Warsaw Stock Exchange (WSE). This study contributes to the existing literature by considering earnings manipulation behaviours in assessing the reporting data quality, both in consolidated financial statements of business groups and individual financial statements of parent undertakings. The research methods are based on the Modified Jones Model with the simultaneous separation of individual subcategories of accruals via cross-sectional analysis and time-series data approach (separately for each business group). Empirical findings supported the presumption that earnings manipulation schemes in the SARS-CoV-2 transitional (2020) and crisis (2021) periods differed statistically compared to the previous 2019 and 2020 years, respectively. Moreover, this article proved that the company‘s potential financial distress could imply accrual-based earnings management behaviours and moderate the association between the SARS-CoV-2 pandemic and earnings manipulations activities. Finally, the obtained results confirmed that although business groups have an expanded set of balance sheet policy instruments, the quality of earnings reported in the individual financial statements of parent undertakings and the consolidated financial statements of business groups were similar during the SARS-CoV-2 pandemic.

Keywords: accrual-based earnings management; business group; parent undertakings; the SARS-CoV-2 pandemic (search for similar items in EconPapers)
JEL-codes: G10 G32 M41 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.2478/ceej-2024-0019 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:vrs:ceuecj:v:11:y:2024:i:58:p:286-304:n:1019

DOI: 10.2478/ceej-2024-0019

Access Statistics for this article

Central European Economic Journal is currently edited by Anna Matysiak

More articles in Central European Economic Journal from Sciendo
Bibliographic data for series maintained by Peter Golla ().