Financial reporting quality during the Covid-19 pandemic : evidence from transportation sector and tourism/recreation industry in Indonesia

Purpose: The purpose of this research is to analyze the financial reporting quality during the Covid-19 pandemic. This study is focused on transportation sector companies, which comprised of the passenger land transportation and airlines industries and the companies in tourism and recreation industry. This is important since these companies experienced a severe impact during the COVID-19 Pandemic. Design/methodology/approach: To analyze the quality of financial reporting during the Covid-19 pandemic, this study occupies the parametric and non-parametric test of difference, namely t-test paired sample and Wilcoxon signed rank test to compare the financial reporting quality between the period prior and during the pandemic. The financial reporting quality is proxied by accrual earning management. Findings: This research finds that the financial reporting quality of companies in passenger land transportation, airlines, tourism and recreation industries is significantly lower during the Covid-19 pandemic. Companies in these industries attempt to conceal their poor financial performance during the pandemic by opportunistically manage their earnings. Research limitations/implications: This study highlights the importance of high-quality financial reporting to help investors to make better investment decisions. This study does not specifically examine the role of auditor in ensuring the high quality of financial reporting. Originality/value: This study contributes by providing new empirical evidence about the financial reporting quality by investigating the impact of Covid-19 on accrual earnings management practices. To the best knowledge, this is the first study that explores the issue of financial reporting quality during the Covid-19 for passenger land transportation, airlines, tourism and recreation industries in Indonesia.