Influence of accounting compliance on business stability

Abstract

Accounting formality has been a pillar that has guaranteed transparency, institutional reliability, and corporate sustainability. In Ecuador, the presentation of the initial balance sheet has been a legally required practice that allows authorities to monitor the financial situation of companies and assess their continued operating capacity. However, not all companies have complied with this requirement in a timely manner, which could affect their legal and operational status. Therefore, this study focuses on analyzing the relationship between the presentation of the initial balance sheet and the legal status of companies registered in Ecuador and its influence on the legal and operational continuity of organizations. To this end, a quantitative census-type analysis was conducted using a secondary database of companies registered with the country's Superintendency of Companies, Securities, and Insurance. Consequently, a descriptive and statistical analysis was applied to identify significant associations between this relationship. The results showed that companies that complied with the presentation of the initial balance sheet largely maintained their active status. While those that did not comply with this requirement showed a greater tendency toward resolution, cancellation, or inactivity processes. Consequently, it is concluded that compliance with this accounting obligation is a vital determinant of the legal and operational continuity of companies. Therefore, the need to strengthen internal control mechanisms and state oversight actions has been suggested to promote accounting formality from the early stages of business activity.