COVID-19 Pandemic's Impact on Financial Performance of Companies

Strategic Insights -

A recent study by researchers from Islamic Azad University has shed light on the significant consequences of the COVID-19 pandemic on various fields, including capital markets and the global economy. The research focused on the impact of audit quality on the relationship between earnings management and financial performance of companies listed on the Tehran Stock Exchange during the pandemic. The study found that the COVID-19 pandemic has had a significant effect on the financial performance of companies, with accrual earnings management and auditor reputation showing a strong relationship with financial performance. However, the pandemic did not have a significant effect on real earnings management and auditor tenure.

Key Takeaways:

  • The COVID-19 pandemic had a significant impact on the financial performance of companies listed on the Tehran Stock Exchange.
  • Accrual earnings management and auditor reputation have a strong relationship with financial performance.
  • Auditor tenure has a positive and significant effect on the relationship between accrual earnings management and financial performance.
  • Real earnings management and auditor tenure did not show a significant relationship with financial performance.
  • Earnings management is a key factor in presenting a favorable image of companies to investors.
  • The research fills the existing gap regarding the impact of financial crises on the financial performance of companies and audit quality in the COVID-19 era.

Statistics:

  • 106 companies were sampled for the period 2011 to 2021.
  • The study used a multiple regression model and panel data analysis.
  • Accrual earnings management had a significant effect on financial performance (p < 0.01).
  • Auditor reputation had a negative and significant effect on the relationship between accrual earnings management and financial performance (p < 0.05).
  • Auditor tenure had a positive and significant effect on the relationship between accrual earnings management and financial performance (p < 0.01).

Sources:

  • hsabdary w shfafyt maly; The impact of audit quality on the relationship between earnings management and financial performance of companies during the COVID-19 pandemic; 2025;2(3):26-53. (Islamic Azad University, Safashahr Branch)
  • NewsRx. Research from Islamic Azad University Yields New Data on COVID-19 (The impact of audit quality on the relationship between earnings management and financial performance of companies during the COVID-19 pandemic). TB & Outbreaks Week. October 21, 2025; p 380.