COVID-19가 중소기업의 이익조정에 미치는 영향

This paper explores whether unlisted small and medium-sized enterprises (SMEs) in South Korea manage earnings upward in order to mask poor performance that originates from sharp economic recession during the COVID-19 pandemic. We find that SMEs on average engage in more aggressive income-increasing accrual management during the pandemic compared to 2019, suggesting that managers at SMEs exercise discretion to manage earnings upward to conceal poor performance during the pandemic. Further analyses, however, show that SMEs’ incentives to engage in accrual management vary in the cross-section by operating performance.. We document that SMEs that experience sales decline or report loss during the pandemic engage in accrual management to a less extent, compared to SMEs that experience sales growth or report profit. While counterintuitive at a first glance, these findings are consistent that poorly performing SMEs engage in “big bath accounting”, presumably because they can attribute poor performance to economy-wide forces (outside of individual firms’ control), and because government policies designed to support SMEs mute incoming-increasing earnings management incentives.