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Covid-19, corporate survival and public policy: The role of accounting information and regulation in the wake of a systemic crisis☆

ABSTRACT: The economic crisis triggered by the Covid-19 pandemic prompted governments to issue several relief mechanisms to hold up companies and workers. This study analyzes how accounting information and regulation can support policymakers in the wake of a systemic crisis. Based on an accounting-based framework and readily available data from financial statements, it forecasts the impact of the crisis in terms of losses, equity depletion, and corporate defaults, absent government intervention. Next, it quantifies the costs and effects of five relief mechanisms in alleviating the risk of generalized corporate bankruptcies. The effects of the health pandemic and relief mechanisms on profitability and equity shortfalls are estimated for a sample of 586,076 privately held Italian firms. The findings indicate that the number of companies facing bankruptcy risk would increase from 65,463 (11% of the population) in 2019 to 153,681 (26%) in 2020, absent any government intervention. Altogether, these firms employ 1.4 million employees and have a total exposure to the financial industry equal to €68 billion in loans. Next, we assess the effects of relief mechanisms introduced by the Italian government to support corporations, whose aggregate costs reach €49.33 billion in 2020, and find that the interventions ‘rescue’ about 43,000 firms otherwise in default. Finally, the study adds to the debate on the role of accounting regulation in the wake of a systemic crisis by (a) discussing the effects of temporary changes to accounting rules on the informativeness and transparency of financial statements, and (b) suggesting alternative ways to modify accounting rules to safeguard corporate survival without compromising the informativeness of financial statements once the crisis reaches a halt.

SUBMITTER: Buchetti B

PROVIDER: S-EPMC8609101 | biostudies-literature |

REPOSITORIES: biostudies-literature

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Project description:BackgroundNon-communicable diseases (NCDs) kill 41 million people a year. The products and services of unhealthy commodity industries (UCIs) such as tobacco, alcohol, ultra-processed foods and beverages and gambling are responsible for much of this health burden. While effective public health policies are available to address this, UCIs have consistently sought to stop governments and global organisations adopting such policies through what is known as corporate political activity (CPA). We aimed to contribute to the study of CPA and development of effective counter-measures by formulating a model and evidence-informed taxonomies of UCI political activity.MethodsWe used five complementary methods: critical interpretive synthesis of the conceptual CPA literature; brief interviews; expert co-author knowledge; stakeholder workshops; testing against the literature.ResultsWe found 11 original conceptualisations of CPA; four had been used by other researchers and reported in 24 additional review papers. Combining an interpretive synthesis of all these papers and feedback from users, we developed two taxonomies - one on framing strategies and one on action strategies. The former identified three frames (policy actors, problem, and solutions) and the latter six strategies (access and influence policy-making, use the law, manufacture support for industry, shape evidence to manufacture doubt, displace, and usurp public health, manage reputations to industry's advantage). We also offer an analysis of the strengths and weaknesses of UCI strategies and a model that situates industry CPA in the wider social, political, and economic context.ConclusionOur work confirms the similarity of CPA across UCIs and demonstrates its extensive and multi-faceted nature, the disproportionate power of corporations in policy spaces and the unacceptable conflicts of interest that characterise their engagement with policy-making. We suggest that industry CPA is recognised as a corruption of democracy, not an element of participatory democracy. Our taxonomies and model provide a starting point for developing effective solutions.

Project description:BackgroundThe Framework Convention of Tobacco Control (FCTC) provides a basis for nation states to limit the political effects of tobacco industry philanthropy, yet progress in this area is limited. This paper aims to integrate the findings of previous studies on tobacco industry philanthropy with a new analysis of British American Tobacco's (BAT) record of charitable giving to develop a general model of corporate political philanthropy that can be used to facilitate implementation of the FCTC.MethodAnalysis of previously confidential industry documents, BAT social and stakeholder dialogue reports, and existing tobacco industry document studies on philanthropy.ResultsThe analysis identified six broad ways in which tobacco companies have used philanthropy politically: developing constituencies to build support for policy positions and generate third party advocacy; weakening opposing political constituencies; facilitating access and building relationships with policymakers; creating direct leverage with policymakers by providing financial subsidies to specific projects; enhancing the donor's status as a source of credible information; and shaping the tobacco control agenda by shifting thinking on the importance of regulating the market environment for tobacco and the relative risks of smoking for population health. Contemporary BAT social and stakeholder reports contain numerous examples of charitable donations that are likely to be designed to shape the tobacco control agenda, secure access and build constituencies.Conclusions and recommendationsTobacco companies' political use of charitable donations underlines the need for tobacco industry philanthropy to be restricted via full implementation of Articles 5.3 and 13 of the FCTC. The model of tobacco industry philanthropy developed in this study can be used by public health advocates to press for implementation of the FCTC and provides a basis for analysing the political effects of charitable giving in other industry sectors which have an impact on public health such as alcohol and food.

Project description:ObjectivePublic crises seriously affect social stability and personal health. When individuals are in a public crisis environment, they will have the impulse and intention to share information, which is a behavioral attitude shown in the face of a crisis. Public crisis information sharing intention will be affected by many factors. This study aims to examine how the process of social presence may influence information sharing intentions during a public crisis and the mediating effects of situational pressure, including risk perception of disease infection and consistency of perception of opinion climate.MethodsThis was a cross-sectional study with 505 youth SNS users. In order to collect as suitable samples as possible, a research website was commissioned to conduct a questionnaire in the early stages of the COVID-19 pandemic in China. This questionnaire was utilized to measure social presence, risk perception of disease infection, consistency of perception of opinion climate and intention to share information about COVID-19. Structural equation modeling was used to examine variable relationships in the research model.ResultsThe results showed that social presence was significantly and positively associated with risk perception of disease infection (B = 0.42, p < 0.001), consistency of perception of opinion climate (B = 0.43, p < 0.001) and intention to share information about COVID-19 (B = 0.48, p < 0.001). Risk perception of disease infection (B = 0.19, p < 0.001) and consistency of perception of opinion climate (B = 0.18, p = 0.002) positively predicted youth SNS users' intention to share information about COVID-19. Risk perception of disease infection and consistency of perception of opinion climate mediated the relationship between social presence and intention to share information about COVID-19 (Z = 2.66, CI: 0.03, 0.15; Z = 2.66, CI: 0.02, 0.16).ConclusionThe study further deepens our understanding of the mechanisms underlying social presence and information sharing intentions. These new findings suggest that some situational cues, including media environment factors (social presence) and perceived stress factors (risk perception of disease infection, consistency of perception of opinion climate) may influence information sharing intention. From the perspective of communication psychology, this study enriched the assessment of information sharing on social media and contributes to understanding of social presence and situation pressure, and it helps to provide specific references for effectively promoting netizens' intention to share information about public crises.

Project description:Green credit is changing industrial structure and corporate behavior, but little attention has been paid to the relationship between green credit and corporate cash management behavior. Based on the typical fact that the allocation of traditional bank credit funds is biased towards heavily polluting industries and the exogenous impact event of green credit policy, this paper takes A-share listed companies in China's capital market from 2008 to 2015 as samples, and uses the DID model to investigate the impact of green credit policy on excess cash holdings of heavily polluting enterprises. The findings indicate that the green credit policy has reduced the excessive cash holdings of heavily polluting enterprises, suggesting that it can correct the issue and align their cash holdings with the requirements of normal production and operations. The mechanism test demonstrates that the green credit policy can alleviate agency conflicts and influence enterprise cash holdings. Moreover, a cross-sectional investigation reveals that the inhibitory effect of the green credit policy on cash holdings is more pronounced in large-scale and state-owned enterprises compared to small-scale and non-state-owned enterprises. Finally, an analysis of the economic consequences reveals that the green credit policy indirectly enhances corporate value by reducing excessive cash holdings. Based on this, banks and financial institutions continue to treat the credit granting of heavily polluting enterprises cautiously, optimize the structure of green financial products, fully consider the different types and nature of customers, and develop differentiated lending conditions and diversified evaluation mechanisms. This paper has enriched the research on the economic consequences of green credit and the influencing factors of corporate cash holdings, and provided policy enlightenment for regulators and listed companies to correctly understand and make full use of green credit policies to keep corporate cash stable through the crisis.

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Covid-19, corporate survival and public policy: The role of accounting information and regulation in the wake of a systemic crisis☆

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