Resumen

MPUMPULA, Asanda; DE JESUS, Carlos  y  MARAIS, Alastair. The impact of COVID-19 on accrual-based earnings management: Evidence from South Africa. S. Afr. j. econ. manag. sci. [online]. 2026, vol.29, n.1, pp.1-12. ISSN 2222-3436.  https://doi.org/10.4102/sajems.v29i1.6363.

BACKGROUND: The coronavirus disease 2019 (COVID-19) pandemic created a period of economic turbulence, affecting firms' performance and providing management with incentives to change their earnings management behaviour. While research has been conducted on the COVID-19 pandemic and other crises in developed markets, evidence from emerging markets, particularly Africa, is limited. Sector-specific research is even more limited. AIM: This study investigated the COVID-19 pandemic's impact on accruals-based earnings management (AEM) behaviour in South Africa. The study also investigates differences in sector-specific responses. SETTING: This study's population comprised all 333 Johannesburg Stock Exchange (JSE) firms from 2016 to 2022. METHOD: This study examined 159 JSE-listed firms across eight sectors from 2016 to 2022 using fixed-effects panel regressions. Absolute and signed discretionary accruals were examined to measure changes in the magnitude and direction of AEM. RESULTS: Firms engaged in more income-decreasing AEM during the pandemic, consistent with 'big bath' behaviour as explained by agency and prospect theory. COVID-19's impact on earnings management was asymmetric across sectors. Sectors facing more pronounced operational restrictions during the pandemic, such as consumer discretionary and basic materials, experienced shifts in earnings management behaviour, while less affected sectors showed no significant change. CONCLUSION: The findings indicate that AEM behaviour changed in South African listed firms, and that this change was not uniform across sectors. CONTRIBUTION: Sector-specific testing during a unique natural experiment with asymmetric economic impacts across sectors provides a clearer lens to examine management's behaviour. The findings can be used to enhance investor protection, leading to greater economic stability. Awareness and consideration of these results in decision-making and monitoring can improve the firm's control environment, ensuring better capital allocation.

Palabras clave : accruals-based earnings management; quality of earnings; JSE; COVID-19 pandemic; South Africa.

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