The Effect of BIG BATH Creative Accounting on Impairment of Assets under the COVID-19 Situation of Listed Companies in the Stock Exchange of Thailand
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Abstract
During the COVID-19 pandemic crisis, many businesses may take advantage of this opportunity to engage in creative accounting. One such method is called BIG BATH, which involves recording a significant loss in a critical year, even if the loss is not related to the COVID-19 situation. Companies attribute these huge losses entirely to the COVID-19 crisis to 'clean the slate, metaphorically taking a big bath. This study aimed to identify the effects of BIG BATH creative accounting on asset impairment during the COVID-19 situation among companies listed on the Stock Exchange of Thailand. The study population consists of 523 companies, with data collected in 2020, the year when COVID-19 first emerged, to provide new and up-to-date information on creative accounting and asset impairment under uncertain circumstances, particularly during the COVID-19 pandemic. The findings reveal no relationship between BIG BATH creative accounting and asset impairment. However, there was a significant relationship between business size and asset impairment of listed companies on the Stock Exchange of Thailand at the 0.02 significance level. Additionally, the study found that creative accounting using the BIG BATH method significantly affects the profitability of listed companies on the Stock Exchange of Thailand at the 0.001 significance level. While the research limitations include the duration of these unusual circumstances, it is important to note that factors affecting each business may vary.
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