The Effects of Covid-19 on Financial Statements: Some Insights from Italy through an International Literature Review

Abstract

The uncertainty generated by the Covid-19 pandemic has influenced countless aspects of business management. In order to deal with the pandemic, managers had to make particularly complex choices regarding, for example, the cash management activities, investment decisions and workplace safety procedures. At the same time, the instability related to the performance and solvency of companies has made it necessary for companies to have adequate information disclosure, even more than that in the past. The Covid-19 pandemic has in fact increased the need for an effective communication about the main corporate events with all corporate stakeholders. Based on this premise, this study aims to highlight the main scientific contributions regarding the impact that the Covid-19 pandemic has had on accounting and on corporate financial reports. The analysis carried out led to the identification of five thematic areas: Policy, Corporate Social Responsibility, Disclosure, Financial Statements Data and Audit. Moreover, considering the importance of providing adequate disclosure in a period of great uncertainty, this paper proposes an analysis on the disclosure about the Covid-19 pandemic provided by the companies belonging to the FTSE MIB index of the Italian Stock Exchange. Following a preliminary quantitative analysis of the performance of these companies, a content analysis was carried out on the financial statements and the main documents attached to it, in order to verify the presence of references to the Covid-19 pandemic. It will be shown that the companies analyzed have made adequate disclosure of information regarding the emergency situation arising from the pandemic.

Restaurants’ Solvency in Portugal during COVID-19

“…It is realized then that, with the uncertain situation created by COVID-19, business managers must make particularly complex decisions. These decisions promote the disclosure of information in a more appropriate way (Tibiletti et al 2021).…”

“…Additionally, Tibiletti et al (2021) claim that the analysis of company performance through solvency and profitability reduces the negative effects caused by COVID-19 and that this kind of analysis had increased in the scientific literature but not in the restaurant industry. To address this research gap, the following hypothesis was developed:…”

Earnings Management Factors In The Consumer Goods Industry During The Covid-19 Pandemic

“…Several business sectors have experienced a decline in sales and production due to restrictions implemented by the governments of numerous countries (Sultana et al, 2021). To deal with a pandemic, managers must frequently make complex decisions, such as managing financial reporting (Tibiletti et al, 2021). It is due to the importance of financial reports in decision-making (Hariasih et al, 2020;Osadchy et al, 2018;Thi and Thi, 2022), particularly in analyzing investment and credit decisions related to the company's future (Atuilik and Salia, 2018;Widarti and Pramajaya, 2018).…”