We examine the extent to which broad-scope management control systems (MCS) mitigate the negative impact of a crisis with extreme uncertainty on investor and shareholder expectations and the potential role of boundary systems in this link. We use the COVID-19 pandemic as research setting to analyse this link and market value as a proxy for expectations. Our hypotheses are tested using a combination of survey and archival data from large organizations listed on the Brazilian Stock Exchange, resulting in a panel of 6257 organization-week observations. Our main results are consistent with the hypotheses. We also conduct a series of sensitivity tests to check the robustness of our main findings. Our results remain significant across specifications: alternative identification strategy, or additional control variables. In an additional analysis, we also examine the role of lenders. Overall, we extend the scarce prior literature on the effectiveness of MCS under crisis management and provide new evidence for signaling theory, thus connecting both streams of literature. The COVID-19 pandemic provides an optimal context for researching this topic because, in contrast to past economic downturns or financial crises, it has required organizations across industries to adapt quickly and respond to new demands with unpredictable economic, behavioural, and societal consequences.
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