COVID-19 government grants, liquidity indicators and going concern uncertainty

Robert Bertrand; Erwin Hardeman

doi:10.5117/mab.96.77531

COVID-19 government grants, liquidity indicators and going concern uncertainty

Robert Bertrand, Erwin Hardeman^*

^*Corresponding author for this work

Research output: Contribution to journal › Article › Academic › peer-review

Abstract

The purpose of this study is to enhance our understanding of the effect of the liquidity position on going concern reporting during the COVID-19 liquidity crisis. The first possible effects of COVID-19 as they occur in 2020 are enclosed in the financial statements of 2019 as an event after the balance sheet date. By studying a sample of 579 financial statements of private (non-listed) companies that are subject to a statutory audit in the Netherlands, we find that both liquidity indicators and government grant applications result in a higher propensity to issue a mandatory going concern paragraph in the financial statements. Additionally, we find no evidence that liquidity levels prior to the COVID-19 pandemic crisis affect an application for a government grant.

Original language	English
Pages (from-to)	75-85
Number of pages	11
Journal	Maandblad voor Accountancy en Bedrijfseconomie
Volume	96
Issue number	3/4
DOIs	https://doi.org/10.5117/mab.96.77531
Publication status	Published - 2 Jun 2022

Keywords

COVID-19
private companies
business support programs
government grants
liquidity
going concern

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10.5117/mab.96.77531Licence: CC BY-NC-ND

Cite this

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title = "COVID-19 government grants, liquidity indicators and going concern uncertainty",

abstract = "The purpose of this study is to enhance our understanding of the effect of the liquidity position on going concern reporting during the COVID-19 liquidity crisis. The first possible effects of COVID-19 as they occur in 2020 are enclosed in the financial statements of 2019 as an event after the balance sheet date. By studying a sample of 579 financial statements of private (non-listed) companies that are subject to a statutory audit in the Netherlands, we find that both liquidity indicators and government grant applications result in a higher propensity to issue a mandatory going concern paragraph in the financial statements. Additionally, we find no evidence that liquidity levels prior to the COVID-19 pandemic crisis affect an application for a government grant.",

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AB - The purpose of this study is to enhance our understanding of the effect of the liquidity position on going concern reporting during the COVID-19 liquidity crisis. The first possible effects of COVID-19 as they occur in 2020 are enclosed in the financial statements of 2019 as an event after the balance sheet date. By studying a sample of 579 financial statements of private (non-listed) companies that are subject to a statutory audit in the Netherlands, we find that both liquidity indicators and government grant applications result in a higher propensity to issue a mandatory going concern paragraph in the financial statements. Additionally, we find no evidence that liquidity levels prior to the COVID-19 pandemic crisis affect an application for a government grant.

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COVID-19 government grants, liquidity indicators and going concern uncertainty

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Keywords

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