The Impact of Creditors on Accounting Conservatism During the Corona Pandemic: A Study on Companies Listed on the Palestine Exchange

Abstract

This study aimed to test the impact of creditors on accounting conservatism in Palestine during the COVID-19 pandemic, excluding the banking sector. To achieve this goal, data was collected from financial reports published on the Palestine Exchange website for the period 2020–2021. The study sample included 76 annual observations, and the data was analyzed using multiple regression models, specifically fixed effects, random effects, and ordinary least squares. The random effects model was selected as the most suitable.The results revealed a significant positive impact of short-term debt on accounting conservatism, while long-term debt had no impact. Additionally, accounting conservatism was found to be significantly lower in large companies.Based on these findings, the study recommends that investors consider investing in Palestinian companies relying on short-term financing due to its flexibility during crises, while avoiding those heavily dependent on long-term debt, given its higher risks. Stakeholders, particularly creditors, should recognize that larger company size does not guarantee effective debt management, making it preferable to focus on companies practicing conservative accounting.Furthermore, the study suggests future research using alternative control variables and diverse measures of accounting conservatism, as well as expanding the scope to include larger markets and additional sectors to obtain more comprehensive and accurate results.