This study examines how extending financial reporting deadlines during economic crises affects corporate transparency and the allocation of public resources. We exploit an unexpected regulatory extension granted by the Italian government for FY2019 filings at the onset of the COVID-19 pandemic. Leveraging a novel and comprehensive dataset covering a large and representative sample of privately held Italian SMEs, we provide analyses of how delayed filings influenced firms’ access to public guaranteed loans (PGLs) and subsidies. Our findings suggest that firms taking advantage of the extended filing deadline (“late filers”) secured more PGLs and subsidies by strategically managing their FY2019 financial statements to meet subsidy eligibility criteria. This behavior is particularly pronounced among late filers in industries heavily reliant on government relief, and late filers whose pre-COVID-19 cost structures incentivized accounting manipulation. Additionally, we observe that firms exploiting the filing extension displayed similar or even weaker subsequent growth relative to early filers and firms that did not utilize the extension. Our results suggest that crisis-induced reporting deadline extensions can compromise financial transparency and potentially result in suboptimal allocation of public resources.
