The Role of Crisis Conditions in Moderating Determinants of Corporate Financial Performance: Evidence from Indonesia, Malaysia, and Singapore
Abstract
This research investigates how a global crisis—specifically the pandemic—has affected firms' financial performance, as reflected by Return on Assets (ROA), and explores its influencing factors: Current Ratio (CR), Debt Ratio (DR), and Firm Size. Employing a panel dataset of 270 companies from 2019 to 2023 and leveraging a Difference-in-Differences (DiD) framework with a random effects model, the study reveals that the pandemic significantly lowered ROA, with a coefficient of –0.0085 (p = 0.0244). Conversely, the subsequent recovery period exhibited no meaningful change in ROA (coefficient 0.0002, p = 0.9581). Among the financial determinants, Debt Ratio and Firm Size exerted a notable negative influence on ROA, while Current Ratio showed no statistical significance. The findings suggest that corporate financial performance deteriorated during the crisis and did not fully rebound afterward. This highlights the critical role of adaptive management strategies during and following such disruptive events
Keywords
References
Angrist, J. D., & Pischke, J. S. (2009). Mostly harmless econometrics: An empiricist’s companion. Princeton University Press.
Asian Development Bank (ADB). (2021). Asian Development Outlook 2021: Financing a green and inclusive recovery. https://www.adb.org/publications/ado2021
Ayadi, S., & Boujelbene, Y. (2020). Firm size, profitability and earnings management: The case of Tunisian listed firms. Academy of Accounting and Financial Studies Journal, 24(2), 1–16.
Baker, S. R., Bloom, N., Davis, S. J., & Terry, S. J. (2020). COVID-induced economic uncertainty. National Bureau of Economic Research. https://doi.org/10.3386/w26983
Baltagi, B. H. (2021). Econometric analysis of panel data (6th ed.). Springer.
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120. https://doi.org/10.1177/014920639101700108
Booth, L., Aivazian, V., Demirguc-Kunt, A., & Maksimovic, V. (2001). Capital structures in developing countries. The Journal of Finance, 56(1), 87–130. https://doi.org/10.1111/0022-1082.00320
Brigham, E. F., & Daves, P. R. (2013). Intermediate financial management (12th ed.). Cengage Learning.
Brigham, E. F., & Houston, J. F. (2019). Fundamentals of financial management (15th ed.). Cengage Learning.
Chen, H., Frank, M. Z., & Wu, O. Q. (2019). Cash holdings and corporate policies. Review of Financial Studies, 32(8), 3362–3400. https://doi.org/10.1093/rfs/hhz009
Frank, M. Z., & Goyal, V. K. (2009). Capital structure decisions: Which factors are reliably important? Financial Management, 38(1), 1–37.
Goh, B., & Lim, S. (2013). Firm size and performance: Evidence from the Singapore market. Singapore Management Review, 35(1), 29–45.
Gujarati, D. N., & Porter, D. C. (2021). Basic econometrics (6th ed.). McGraw-Hill Education.
IAS Plus. (2017). International Financial Reporting Standards. https://www.iasplus.com/en/standards
Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance, and takeovers. The American Economic Review, 76(2), 323–329. https://www.jstor.org/stable/1818789
Jiang, Y., & Zhang, J. (2023). The relationship between capital structure and performance of real estate companies in China. In Comparative Analysis of Trade and Finance in Emerging Economies (Vol. 31, pp. 217–233). Emerald Group Publishing. https://doi.org/10.1108/S1571-038620230000031028
La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. (1997). Legal determinants of external finance. The Journal of Finance, 52(3), 1131–1150. https://doi.org/10.1111/j.1540-6261.1997.tb02727.x
Modigliani, F., & Miller, M. H. (1958). The cost of capital, corporation finance and the theory of investment. The American Economic Review, 48(3), 261–297.
Mulyaningsih, T., Sarmidi, T., & Cahya, M. (2022). Corporate debt, institutional differences and firms’ financial distress in emerging economies under uncertainty. ResearchGate. https://www.researchgate.net/publication/377403148
OECD. (2020). Coronavirus (COVID-19): SME policy responses. https://www.oecd.org/coronavirus/policy-responses
Praseyo, E. (2009). Analisis pengaruh proteksi investor terhadap manajemen laba: Studi komparasi Malaysia dan Indonesia [Tesis S2, Universitas Gadjah Mada].
Rajan, R. G., & Zingales, L. (1995). What do we know about capital structure? Some evidence from international data. The Journal of Finance, 50(5), 1421–1460. https://doi.org/10.1111/j.1540-6261.1995.tb05184.x
Sarmidi, T., Mulyaningsih, T., & Habibullah, M. S. (2021). Macroeconomic policy responses and firm performance during the COVID-19 pandemic: Evidence from Southeast Asia. Asian Economic Papers, 20(4), 66–89.
Scott, W. R. (2000). Financial accounting theory. Prentice Hall.
Siti Aminah Anwar, Junaidi, & Moh. Amin. (2015). Dampak rasio CAMELS terhadap praktik manajemen laba pada perbankan syari’ah. Proceedings International Conference on Islamic Economics and Business.
Werastuti, D. N. S. (2017). Does bond ratings assess accrual quality and good corporate governance? International Journal of Managerial Studies and Research (IJMSR), 5, 1–14.
World Bank. (2021). COVID-19 to add as many as 150 million extreme poor by 2021. https://www.worldbank.org/en/news
Zimon, G., & Tarighi, H. (2021). Effects of the COVID-19 global crisis on the liquidity risk level: Evidence from the food sector. Agriculture, 11(5), 458. https://doi.org/10.3390/agriculture11050458
Desak Nyoman Sri Werastuti. (2017). Does bond ratings assess accrual quality and good corporate governance? International Journal of Managerial Studies and Research, 5(1), 1–14.
Mulyani, S., & Wahyudi, S. (2020). The impact of COVID-19 on business sustainability in ASEAN. Jurnal Ekonomi dan Keuangan Indonesia, 6(2), 150–165.
ADB. (2022). Regional economic outlook update. https://www.adb.org/publications/20
DOI: https://doi.org/10.17509/jbme.v10i2.89070
Refbacks
- There are currently no refbacks.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
Journal of Business Management Education (JBME)is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License
View My Stats