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ISSN : 1738-3110

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Vol.20 No.4
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The Impact of COVID-19 on Earnings Management in the Distribution and Service Industries

The Impact of COVID-19 on Earnings Management in the Distribution and Service Industries

The Journal of Distribution Science(JDS) / The Journal of Distribution Science, (P)1738-3110; (E)2093-7717
2022, v.20 no.4, pp.95-100
https://doi.org/https://doi.org/10.15722/jds.20.04.202204.95
RYU, Haeyoung (Department of Business Administration, Hansei University)
CHAE, Soo-Joon (Department of Business Administration & Accounting, Kangwon National University)
RYU, Haeyoung, & CHAE, Soo-Joon. (2022). The Impact of COVID-19 on Earnings Management in the Distribution and Service Industries. The Journal of Distribution Science(JDS), 20(4), 95-100, https://doi.org/https://doi.org/10.15722/jds.20.04.202204.95
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Abstract

Purpose: This study aimed to investigate whether distribution and service companies maintained their accounting information quality and provided reliable information despite the economic changes occurring after the outbreak of the COVID-19 pandemic in Korea. The distribution industry has enjoyed increased demand as many companies expanded their untact distribution channels, including to online sales. However, as the pandemic drags on, their future prospects remain uncertain. Research design, data, and methodology: In this study, we define 2018-2019 as the "pre COVID-19 period" and 2020 as the "post COVID-19 period." An empirical analysis was performed using a regression model that includes POST, the independent variable, indicating the post COVID-19 period, and discretionary accruals(DA), a proxy for earnings management, as a dependent variable. Results: The analysis shows that the coefficient of POST is significantly positive (+) for the dependent variable DA. This finding suggests that distribution and service companies engaged in more earnings management during the post COVID-19 period than during the pre COVID-19 period, indicating their awareness of the uncertainty of future business performance as the pandemic persists. An additional analysis confirmed that smaller companies with fewer stakeholders and higher information asymmetry tend to engage more in earnings management than larger companies.

keywords
Distribution and Service Industries, COVID 19 Pandemic, Earnings Management, Information Asymmetry

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The Journal of Distribution Science(JDS)

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