IDEAS home Printed from https://ideas.repec.org/a/gam/jstats/v6y2023i1p25-430d1086644.html
   My bibliography  Save this article

Renaissance of Creative Accounting Due to the Pandemic: New Patterns Explored by Correspondence Analysis

Author

Listed:
  • Roman Blazek

    (Department of Economics, Faculty of Operation and Economics of Transport and Communications, University of Zilina, Univerzitná 8215/1, 010 26 Zilina, Slovakia)

  • Pavol Durana

    (Department of Economics, Faculty of Operation and Economics of Transport and Communications, University of Zilina, Univerzitná 8215/1, 010 26 Zilina, Slovakia)

  • Jakub Michulek

    (Department of Economics, Faculty of Operation and Economics of Transport and Communications, University of Zilina, Univerzitná 8215/1, 010 26 Zilina, Slovakia)

Abstract

The COVID-19 outbreak has rapidly affected global economies and the parties involved. There was a need to ensure the sustainability of corporate finance and avoid bankruptcy. The reactions of individuals were not routine, but covered a wide range of approaches to surviving the crisis. A creative way of accounting was also adopted. This study is primarily concerned with the behavior of businesses in the Visegrad Four countries between 2019 and 2021. The pandemic era was the driving force behind the renaissance of manipulation. Thus, the purpose of the article is to explore how the behavior of enterprises changed during the ongoing pandemic. The Beneish model was applied to reveal creative manipulation in the analyzed samples. Its M-score was calculated for 6113 Slovak, 153 Czech, 585 Polish, and 155 Hungarian enterprises. Increasing numbers of handling enterprises were confirmed in the V4 region. The dependency between the size of the enterprise and the occurrence of creative accounting was also proven. However, the structure of manipulators has been changing. Correspondence analysis specifically showed behavioral changes over time. Correspondence maps demonstrate which enterprises already used creative accounting before the pandemic in 2019. Then, it was noted that enterprises were influenced to modify their patterns in 2020 and 2021. The coronavirus pandemic had a significant potency on the use of creative accounting, not only for individual units, but for businesses of all sizes. In addition, the methodology may be applied for the investigation of individual sectors post-COVID.

Suggested Citation

  • Roman Blazek & Pavol Durana & Jakub Michulek, 2023. "Renaissance of Creative Accounting Due to the Pandemic: New Patterns Explored by Correspondence Analysis," Stats, MDPI, vol. 6(1), pages 1-20, March.
    • Handle: RePEc:gam:jstats:v:6:y:2023:i:1:p:25-430:d:1086644
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2571-905X/6/1/25/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2571-905X/6/1/25/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Shah, Atul K., 1996. "Creative compliance in financial reporting," Accounting, Organizations and Society, Elsevier, vol. 21(1), pages 23-39, January.
    2. Katarina Valaskova & Tomas Kliestik & Lucia Svabova & Peter Adamko, 2018. "Financial Risk Measurement and Prediction Modelling for Sustainable Development of Business Entities Using Regression Analysis," Sustainability, MDPI, vol. 10(7), pages 1-15, June.
    3. Ibtihal A. Abed & Nazimah Hussin & Mostafa A. Ali & Hossam Haddad & Maha Shehadeh & Elina F. Hasan, 2022. "Creative Accounting Determinants and Financial Reporting Quality: Systematic Literature Review," Risks, MDPI, vol. 10(4), pages 1-25, April.
    4. Lucia Svabova & Katarina Kramarova & Dominika Chabadova, 2022. "Impact of the COVID-19 Pandemic on the Business Environment in Slovakia," Economies, MDPI, vol. 10(10), pages 1-22, October.
    5. Karol Tucki & Małgorzata Krzywonos & Olga Orynycz & Adam Kupczyk & Anna Bączyk & Izabela Wielewska, 2021. "Analysis of the Possibility of Fulfilling the Paris Agreement by the Visegrad Group Countries," Sustainability, MDPI, vol. 13(16), pages 1-21, August.
    6. Tomas Kliestik & Alena Novak Sedlackova & Martin Bugaj & Andrej Novak, 2022. "Stability of profits and earnings management in the transport sector of Visegrad countries," Oeconomia Copernicana, Institute of Economic Research, vol. 13(2), pages 475-509, June.
    7. Ozkaya, Ata, 2014. "Creative accounting practices and measurement methods: Evidence from Turkey," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 8, pages 1-27.
    8. Roman Lacko & Zuzana Hajduová & Marcin Zawada, 2021. "The Efficiency of Circular Economies: A Comparison of Visegrád Group Countries," Energies, MDPI, vol. 14(6), pages 1-13, March.
    9. Reischmann, Markus, 2016. "Creative accounting and electoral motives: Evidence from OECD countries," Journal of Comparative Economics, Elsevier, vol. 44(2), pages 243-257.
    10. Maryam Mousavi & Grzegorz Zimon & Mahdi Salehi & Nina Stępnicka, 2022. "The Effect of Corporate Governance Structure on Fraud and Money Laundering," Risks, MDPI, vol. 10(9), pages 1-25, September.
    11. Dominika Gajdosikova & Katarina Valaskova & Tomas Kliestik & Veronika Machova, 2022. "COVID-19 Pandemic and Its Impact on Challenges in the Construction Sector: A Case Study of Slovak Enterprises," Mathematics, MDPI, vol. 10(17), pages 1-20, September.
    12. Tarmizi Achmad & Imam Ghozali & Imang Dapit Pamungkas, 2022. "Hexagon Fraud: Detection of Fraudulent Financial Reporting in State-Owned Enterprises Indonesia," Economies, MDPI, vol. 10(1), pages 1-16, January.
    13. Roman Blazek & Pavol Durana & Katarina Valaskova, 2020. "Creative Accounting as an Apparatus for Reporting Profits in Agribusiness," JRFM, MDPI, vol. 13(11), pages 1-19, October.
    14. Denich, Ervin & Hajdu, Dániel, 2021. "Measurement of Creative Accounting by Transparency and Disclosure Index (TDI) Method in Automobile Industry," Public Finance Quarterly, Corvinus University of Budapest, vol. 66(3), pages 381-396.
    15. Milesi-Ferretti, Gian Maria, 2004. "Good, bad or ugly? On the effects of fiscal rules with creative accounting," Journal of Public Economics, Elsevier, vol. 88(1-2), pages 377-394, January.
    16. Hirota, Haruaki & Yunoue, Hideo, 2022. "Fiscal rules and creative accounting: Evidence from Japanese municipalities," Journal of the Japanese and International Economies, Elsevier, vol. 63(C).
    17. Maria Kovacova & Tomas Kliestik & Katarina Valaskova & Pavol Durana & Zuzana Juhaszova, 2019. "Systematic review of variables applied in bankruptcy prediction models of Visegrad group countries," Oeconomia Copernicana, Institute of Economic Research, vol. 10(4), pages 743-772, December.
    18. Michal Pavlicko & Marek Durica & Jaroslav Mazanec, 2021. "Ensemble Model of the Financial Distress Prediction in Visegrad Group Countries," Mathematics, MDPI, vol. 9(16), pages 1-26, August.
    19. repec:eme:agjsr0:agjsr-03-2022-0001 is not listed on IDEAS
    20. Ewelina Kochanek, 2021. "The Energy Transition in the Visegrad Group Countries," Energies, MDPI, vol. 14(8), pages 1-13, April.
    21. Ewelina Kochanek, 2022. "The Role of Hydrogen in the Visegrad Group Approach to Energy Transition," Energies, MDPI, vol. 15(19), pages 1-18, October.
    22. Pankaj C. Patel & Mike G. Tsionas & Maria João Guedes, 2022. "Benford's law, small business financial reporting, and survival," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 3301-3315, December.
    23. Lucia Michalkova & Martin Cepel & Katarina Valaskova & Zuzana Vincurova, 2022. "Earnings Quality and Corporate Life Cycle Before the Crisis. A Study of Transport Companies Across Europe," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 24(61), pages 782-782, August.
    24. Anja Plumeyer & Pascal Kottemann & Daniel Böger & Reinhold Decker, 2019. "Measuring brand image: a systematic review, practical guidance, and future research directions," Review of Managerial Science, Springer, vol. 13(2), pages 227-265, April.
    25. Omurgonulsen, Mine & Omurgonulsen, Ugur, 2009. "Critical thinking about creative accounting in the face of a recent scandal in the Turkish banking sector," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 20(5), pages 651-673.
    26. Katarina Valaskova & Peter Adamko & Katarina Frajtova Michalikova & Jaroslav Macek, 2021. "Quo Vadis, earnings management? Analysis of manipulation determinants in Central European environment," Oeconomia Copernicana, Institute of Economic Research, vol. 12(3), pages 631-669, September.
    27. Ilinova, Alina & Dmitrieva, Diana & Kraslawski, Andrzej, 2021. "Influence of COVID-19 pandemic on fertilizer companies: The role of competitive advantages," Resources Policy, Elsevier, vol. 71(C).
    28. Tha’er Amjed Mahmoud Ababneh & Mehmet Aga, 2019. "The Impact of Sustainable Financial Data Governance, Political Connections, and Creative Accounting Practices on Organizational Outcomes," Sustainability, MDPI, vol. 11(20), pages 1-16, October.
    29. Justyna Godawska & Joanna Wyrobek, 2021. "The Impact of Environmental Policy Stringency on Renewable Energy Production in the Visegrad Group Countries," Energies, MDPI, vol. 14(19), pages 1-23, September.
    30. Marek Nagy & Katarina Valaskova & Pavol Durana, 2022. "The Effect of CSR Policy on Earnings Management Behavior: Evidence from Visegrad Publicly Listed Enterprises," Risks, MDPI, vol. 10(11), pages 1-14, October.
    31. Dominika Gajdosikova & Katarina Valaskova & Pavol Durana, 2022. "Earnings Management and Corporate Performance in the Scope of Firm-Specific Features," JRFM, MDPI, vol. 15(10), pages 1-18, September.
    32. Lucia Svabova & Eva Nahalkova Tesarova & Marek Durica & Lenka Strakova, 2021. "Evaluation of the impacts of the COVID-19 pandemic on the development of the unemployment rate in Slovakia: counterfactual before-after comparison," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 16(2), pages 261-284, June.
    33. Ben-Ahmed, Kais & Ayadi, Imen & Hamad, Salah Ben, 2022. "COVID-19 impact on digital companies’ stock return: A dynamic data analysis," Finance Research Letters, Elsevier, vol. 46(PA).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Valentin Burcă & Oana Bogdan & Ovidiu-Constantin Bunget & Alin-Constantin Dumitrescu, 2024. "Corporate Financial Performance vs. Corporate Sustainability Performance, between Earnings Management and Process Improvement," Sustainability, MDPI, vol. 16(17), pages 1-43, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Maria Kovacova & Lenka Hrosova & Pavol Durana & Jakub Horak, 2022. "Earnings management model for Visegrad Group as an immanent part of creative accounting," Oeconomia Copernicana, Institute of Economic Research, vol. 13(4), pages 1143-1176, December.
    2. Tomas Kliestik & Alena Novak Sedlackova & Martin Bugaj & Andrej Novak, 2022. "Stability of profits and earnings management in the transport sector of Visegrad countries," Oeconomia Copernicana, Institute of Economic Research, vol. 13(2), pages 475-509, June.
    3. Dominika Gajdosikova & Katarina Valaskova & Tomas Kliestik & Maria Kovacova, 2023. "Research on Corporate Indebtedness Determinants: A Case Study of Visegrad Group Countries," Mathematics, MDPI, vol. 11(2), pages 1-30, January.
    4. Martin Bugaj & Pavol Durana & Roman Blazek & Jakub Horak, 2023. "Industry 4.0: Marvels in Profitability in the Transport Sector," Mathematics, MDPI, vol. 11(17), pages 1-23, August.
    5. Nagy Marek & Valaskova Katarina, 2023. "An Analysis of the Financial Health of Companies Concerning the Business Environment of the V4 Countries," Folia Oeconomica Stetinensia, Sciendo, vol. 23(1), pages 170-193, June.
    6. Heinemann, Friedrich & Nover, Justus, 2023. "State-owned enterprises, fiscal transparency, and the circumvention of fiscal rules: The case of Germany," ZEW Discussion Papers 23-058, ZEW - Leibniz Centre for European Economic Research.
    7. Bessho, Shun-ichiro & Hirota, Haruaki, 2023. "Do public account financial statements matter? Evidence from Japanese municipalities," European Journal of Political Economy, Elsevier, vol. 78(C).
    8. Youssef Zizi & Mohamed Oudgou & Abdeslam El Moudden, 2020. "Determinants and Predictors of SMEs’ Financial Failure: A Logistic Regression Approach," Risks, MDPI, vol. 8(4), pages 1-21, October.
    9. Roman Blazek & Pavol Durana & Jakub Michulek & Kristina Blazekova, 2023. "Does the Size of the Business Still Matter, or Is Profitability under New Management, by Order of the COVID-19?," JRFM, MDPI, vol. 16(4), pages 1-28, March.
    10. Marcela De Castro-Valderrama, 2021. "Present-biased Government, Creative Accounting and a Pitfall in Balanced Budget Rules," Borradores de Economia 1183, Banco de la Republica de Colombia.
    11. Florian Dorn & Stefanie Gaebler & Felix Roesel, 2021. "Ineffective fiscal rules? The effect of public sector accounting standards on budgets, efficiency, and accountability," Public Choice, Springer, vol. 186(3), pages 387-412, March.
    12. Michal Pavlicko & Jaroslav Mazanec, 2022. "Minimalistic Logit Model as an Effective Tool for Predicting the Risk of Financial Distress in the Visegrad Group," Mathematics, MDPI, vol. 10(8), pages 1-22, April.
    13. Goto, Tsuyoshi & Yamamoto, Genki, 2023. "Debt issuance incentives and creative accounting: Evidence from municipal mergers in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 68(C).
    14. Gajdosikova Dominika & Valaskova Katarina, 2022. "The Impact of Firm Size on Corporate Indebtedness: A Case Study of Slovak Enterprises," Folia Oeconomica Stetinensia, Sciendo, vol. 22(1), pages 63-84, June.
    15. Jacek Brożyna & Wadim Strielkowski & Aleš Zpěvák, 2023. "Evaluating the Chances of Implementing the “Fit for 55” Green Transition Package in the V4 Countries," Energies, MDPI, vol. 16(6), pages 1-17, March.
    16. Mancini, Anna Laura & Tommasino, Pietro, 2023. "Fiscal rules and the reliability of public investment plans: Evidence from local governments," European Journal of Political Economy, Elsevier, vol. 79(C).
    17. Amélia Ferreira da Silva & José Henrique Brito & Mariline Lourenço & José Manuel Pereira, 2023. "Sustainability of Transport Sector Companies: Bankruptcy Prediction Based on Artificial Intelligence," Sustainability, MDPI, vol. 15(23), pages 1-13, December.
    18. Sebastian Klaudiusz Tomczak, 2023. "General bankruptcy prediction models for the Visegrád Group. The stability over time," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 33(4), pages 171-187.
    19. Katarina Valaskova & Dominika Gajdosikova & Jaroslav Belas, 2023. "Bankruptcy prediction in the post-pandemic period: A case study of Visegrad Group countries," Oeconomia Copernicana, Institute of Economic Research, vol. 14(1), pages 253-293, March.
    20. Niklas Potrafke, 2023. "The Economic Consequences of Fiscal Rules," CESifo Working Paper Series 10765, CESifo.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jstats:v:6:y:2023:i:1:p:25-430:d:1086644. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.