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Does the Covid-19 pandemic affect the financial performance of corporations? Empirical evidence from Indonesia

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  • Ekayana Sangkasari Paranita

    (Universitas Sahid)

  • Any Siska MY

    (Universitas Sahid)

Abstract

The purpose of this study is to empirically analyze the performance of liquidity, leverage, profitability, and activities of firms on the Indonesia Stock Exchange during the Covid-19 pandemic based on a quantitative approach. This study uses secondary data from financial reports of firms listed on the Indonesia Stock Exchange that are included in the LQ45 index, which represents the movement of the capital market based on specific criteria. The results reveal that the Covid-19 pandemic has hurt the Indonesian firm’s financial performance. The worst condition has increased the leverage ratio, and the profitability and activity ratio declined, as experienced in several emerging countries. The findings of this research can be a bunch of information for investors in making decisions that these financial ratios are sensitive to economic volatility. In addition, this finding also adds insight to the company's management, especially LQ45 companies, that the company is expected to be able to maintain its financial fundamentals of these ratios. Further research needs to be carried out on how the effects of the Covid-19 pandemic influence financial performance according to the sector type of the firm and conducted in more time series periods. Key Words:Liquidity, Leverage, Profitability, Activities Ratio

Suggested Citation

  • Ekayana Sangkasari Paranita & Any Siska MY, 2022. "Does the Covid-19 pandemic affect the financial performance of corporations? Empirical evidence from Indonesia," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 11(6), pages 307-313, September.
    • Handle: RePEc:rbs:ijbrss:v:11:y:2022:i:6:p:307-313
    DOI: 10.20525/ijrbs.v11i6.1939
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    References listed on IDEAS

    as
    1. Bai, Min & Ho, Ly, 2022. "Corporate social performance and firm debt levels: Impacts of the covid-19 pandemic and institutional environments," Finance Research Letters, Elsevier, vol. 47(PB).
    2. Huayu Shen & Mengyao Fu & Hongyu Pan & Zhongfu Yu & Yongquan Chen, 2020. "The Impact of the COVID-19 Pandemic on Firm Performance," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(10), pages 2213-2230, August.
    3. Ashraf, Badar Nadeem, 2020. "Economic impact of government interventions during the COVID-19 pandemic: International evidence from financial markets," Journal of Behavioral and Experimental Finance, Elsevier, vol. 27(C).
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