Given that the current economic hardship created by COVID-19 is still in progress, it is important to understand firms’ strategic responses to prior external shocks (e.g., the financial crisis in 2007 and 2008) and the relationship between their courses of action and post-shock firm performance. This study examines (1) whether firms’ practices in financial reporting are associated with the financial crisis and (2) whether firms with conservative financial reporting during the crisis exhibit better performance in post-crisis periods. Using the ordinary least squares (OLS) models and conservatism proxy, we find that firms are more conservative in financial reporting during the financial crisis. We also find that firms with a higher degree of accounting conservatism in the financial crisis outperform in the post-crisis periods. These findings have implications for practice by providing guidance on accounting conservatism for firms who want to develop resilience from financial setbacks due to economic shocks.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
customersupport@researchsolutions.com
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.