COVID-19 is likely to increase agency because investors may not have access to visit and engage with the management, the emotions, and body language are important.
Management can also hide under the pandemic to manipulate earnings.
Every sector has been suffering due to COVID-19, indeed.
I agree with your statement. Also the agency problem will increase, because I assume that earnings management will increase due to pandemic. And as we know there is a direct relationship between earnings management, information asymmetry and agency problem.
Agreed significant commercial impacts have been felt globally because of the disruption in business activities. Still, there is the feeling that the covid-19 pandemic should not lead to an uprise in agency problem; instead, it should decrease it.
The covid-19 pandemic has neither stopped any of the firms’ activities, especially the production of goods and services, nor has it stopped the demand for such goods and services. There has not been any significant change in the way firms operate and run. The only significant change so far is the steady increase in the prices of goods and services.
Consequently, it is an advantage to both firms and the owners. Thus, firms’ decision-makers should instead use the excess profit realized to mitigate the agency problems.
Yes, it is.
Agency problem is always existed in business, and it is even more clear to see during an 'extremity' period, such as recession or even expansion. Because of the advantage/disadvantage are falling on one side, makes someone easier to suffer while beneficial to some others.
I believe it is harder to identify the agency problem during the "old" normal (and stable) business situation.
Agency problems during the Covid 19 pandemic became a serious problem when the company's overall performance decreased. The company's target, of course, cannot be achieved, especially the profit figure targeted by the company as a result of decreased sales. Therefore, management tends to use various accounting policies to regulate earnings figures