Real and Accrual-Based Earnings Management Practices in the Pre-and During the COVID-19 Outbreak: Evidence from UAE Listed Firms

The aim of this article is to examine the prevalence of both accrual and real earnings manipulation practices before and during the Covid-19 Pandemic for publicly listed firms on the Abu Dhabi Securities Exchange (ADX). Our results indicate income-increasing real and accrual earnings management activities have increased during the pandemic period as opposed to the pre-pandemic period. Our results also indicate that, in comparison to the pre-Covid-19 period, firms tend to manage earnings upwards to promote stable performance and avoid abnormal reductions in earnings due to disruptions in business activities. Our study has important implications for both capital providers and regulators who are interested in assessing the credibility of financial statements.