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

Robert Bertrand, Erwin Hardeman*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-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 languageEnglish
Pages (from-to)75-85
Number of pages11
JournalMaandblad voor Accountancy en Bedrijfseconomie
Volume96
Issue number3/4
DOIs
Publication statusPublished - 2 Jun 2022

Keywords

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

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