FINANCIAL REPORTING QUALITY DURING COVID-19 PANDEMIC: INTERNATIONAL EVIDENCE

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 pandemi...

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Published in:Asian Academy of Management Journal of Accounting and Finance
Main Author: Wan Ismail W.A.; Ariff A.M.; Kamarudin K.A.; Adnan N.S.M.
Format: Article
Language:English
Published: Penerbit Universiti Sains Malaysia 2023
Online Access:https://www.scopus.com/inward/record.uri?eid=2-s2.0-85180842823&doi=10.21315%2faamjaf2023.19.2.6&partnerID=40&md5=a8056c7a153a8d14d39ca21d6666c887
id 2-s2.0-85180842823
spelling 2-s2.0-85180842823
Wan Ismail W.A.; Ariff A.M.; Kamarudin K.A.; Adnan N.S.M.
FINANCIAL REPORTING QUALITY DURING COVID-19 PANDEMIC: INTERNATIONAL EVIDENCE
2023
Asian Academy of Management Journal of Accounting and Finance
19
2
10.21315/aamjaf2023.19.2.6
https://www.scopus.com/inward/record.uri?eid=2-s2.0-85180842823&doi=10.21315%2faamjaf2023.19.2.6&partnerID=40&md5=a8056c7a153a8d14d39ca21d6666c887
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. © Asian Academy of Management and Penerbit Universiti Sains Malaysia, 2023.
Penerbit Universiti Sains Malaysia
18234992
English
Article
All Open Access; Gold Open Access
author Wan Ismail W.A.; Ariff A.M.; Kamarudin K.A.; Adnan N.S.M.
spellingShingle Wan Ismail W.A.; Ariff A.M.; Kamarudin K.A.; Adnan N.S.M.
FINANCIAL REPORTING QUALITY DURING COVID-19 PANDEMIC: INTERNATIONAL EVIDENCE
author_facet Wan Ismail W.A.; Ariff A.M.; Kamarudin K.A.; Adnan N.S.M.
author_sort Wan Ismail W.A.; Ariff A.M.; Kamarudin K.A.; Adnan N.S.M.
title FINANCIAL REPORTING QUALITY DURING COVID-19 PANDEMIC: INTERNATIONAL EVIDENCE
title_short FINANCIAL REPORTING QUALITY DURING COVID-19 PANDEMIC: INTERNATIONAL EVIDENCE
title_full FINANCIAL REPORTING QUALITY DURING COVID-19 PANDEMIC: INTERNATIONAL EVIDENCE
title_fullStr FINANCIAL REPORTING QUALITY DURING COVID-19 PANDEMIC: INTERNATIONAL EVIDENCE
title_full_unstemmed FINANCIAL REPORTING QUALITY DURING COVID-19 PANDEMIC: INTERNATIONAL EVIDENCE
title_sort FINANCIAL REPORTING QUALITY DURING COVID-19 PANDEMIC: INTERNATIONAL EVIDENCE
publishDate 2023
container_title Asian Academy of Management Journal of Accounting and Finance
container_volume 19
container_issue 2
doi_str_mv 10.21315/aamjaf2023.19.2.6
url https://www.scopus.com/inward/record.uri?eid=2-s2.0-85180842823&doi=10.21315%2faamjaf2023.19.2.6&partnerID=40&md5=a8056c7a153a8d14d39ca21d6666c887
description 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. © Asian Academy of Management and Penerbit Universiti Sains Malaysia, 2023.
publisher Penerbit Universiti Sains Malaysia
issn 18234992
language English
format Article
accesstype All Open Access; Gold Open Access
record_format scopus
collection Scopus
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