The effect of the COVID-19 pandemic on accrual-based earnings management: Evidence from four most affected European countries.

This study aims to investigate the effect of the COVID-19 pandemic on accrual-based earnings management (EM) based upon a sampling of 938 listed firms from four selected European countries (United Kingdom, Italy, Spain, and Türkiye) during 2016-2020. We find that firms engage more in accrual-based EM through income-increasing and income-decreasing accruals in the year of the COVID-19 pandemic relative to the period before the pandemic. These findings imply that financial reporting reliability and usefulness decreased in the period of the pandemic.