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

Zbornik radova Ekonomskog fakulteta u Rijeci, 2020-01, Vol.38 (2), p.453-473 [Peer Reviewed Journal]

2020. This work is published under https://creativecommons.org/licenses/by-nc-nd/4.0 (the “License”). Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License. ;ISSN: 1331-8004 ;EISSN: 1846-7520 ;DOI: 10.18045/zbefri.2020.2.453

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  • Title:
    The effect of regulatory changes on relationship between earnings management and financial reporting timeliness: The case of COVID-19 pandemic
  • Author: Šušak, Toni
  • Subjects: Accounting ; Changes ; coronavirus ; Coronaviruses ; COVID-19 ; Deadlines ; Deterioration ; Disease transmission ; Earnings ; Earnings management ; Economic forecasts ; Financial information ; Financial reporting ; financial reporting delay ; financial reporting timeliness ; Financial statements ; Hypotheses ; Investments ; Pandemics ; Panel data ; Profitability ; Profits ; Securities markets ; Stock exchanges ; Stock market indexes
  • Is Part Of: Zbornik radova Ekonomskog fakulteta u Rijeci, 2020-01, Vol.38 (2), p.453-473
  • Description: The purpose of this paper was to examine the effect of regulatory changes regarding financial reporting deadlines introduced because of COVID-19 pandemic on relationship between earnings management and financial reporting timeliness. Using sample of companies listed on stock exchange in Republic of Croatia for the period from 2015 to 2019, pooled OLS regression model was estimated with panel data. Financial reporting timeliness was measured with financial reporting delay, while level of earnings management was proxied by discretionary accruals. Empirical results supported the hypothesis that the aforementioned changes of regulatory framework during the extraordinary pandemic circumstances had a statistically significant positive effect on relationship between earnings management and financial reporting delay, indicating that financial reporting delays after regulatory changes during pandemic could be attributed to earnings management activities. Furthermore, after separating income-increasing and income-decreasing accruals, moderating effect of regulatory changes was significant and negative only in case of income decreasing accruals, suggesting that companies were adjusting their financial information in accordance with pessimistic economic forecasts to mitigate probable profitability deterioration in future periods.
  • Publisher: Rijeka: Sveuciliste u Rijeci
  • Language: English;German
  • Identifier: ISSN: 1331-8004
    EISSN: 1846-7520
    DOI: 10.18045/zbefri.2020.2.453
  • Source: Coronavirus Research Database
    ProQuest Central
    DOAJ Directory of Open Access Journals
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