Firms’ performance during the COVID-19 outbreak: international evidence from 13 countries

• DOI: https://doi.org/10.1108/CG-09-2020-0405
• Published date: 18 May 2021
• Date: 18 May 2021
• Pages: 1011-1027
• Subject Matter: Strategy,Corporate governance
• Author: Olga Golubeva

Firms’performance during the

COVID-19 outbreak: international

evidence from 13 countries

Olga Golubeva

Abstract

Purpose –The purpose of this paper is to explore the impact of firm-, finance- and country-specific

indicatorsto the performance of companies underthe COVID-19 outbreak.

Design/methodology/approach –The study uses a regression performance model for enterprises

during the COVID-19 crisis.The investigation is based upon a data set of 5,730 firms from 13 countries

collected by the WorldBank through enterprise surveys. The author combinedthe analysis of traditional

performancemeasurements with the testing of relativelynovel variables.

Findings –This study confirms the significance of multiple factors for company performance: sector,

size, participation in exportsand market demand for firms’ products. Robust financing solutions during

the coronavirus pandemic period include equity contributions, followed by firms’ cash balances and

debt. Support by a government,however, has not yet been confirmed as a significant sourceof finance.

This paper also suggeststhe importance of country-specific factors forthe performance of enterprises,

includingthe level of economic development and the corporategovernance infrastructure.

Practical implications –The research outcomes might assist regulatory bodies, policymakers and

companies in their formulation of public and corporate governance strategies concerning future

emergencypreparedness and responses.

Originality/value –This paper is among the first empirical studies in the management realm that

addressesthe impact of COVID-19 on company performance,with cross-national empirical data.

Keywords Company performance, Financial sources, COVID-19,Country-specif‌ic factors,

Firm-specif‌ic indicators

Paper type Research paper

1. Introduction

In March 2020, the World Health Organisation (WHO) declared that a coronavirus outbreak

(COVID-19) was a pandemic. Overall, this disease,suggested as being linked to a seafood

market in Wuhan, capital city of Hubeiprovince in China (Sohrabi et al.,2020), had infected

over 101.5 million people and resulted in more than 2.1 million deaths by 30 January 2021

(World Health Organisation (WHO), 2021). The 20th century had already witnessed two

pandemics since the historic “Spanish Influenza” of 1918: the “Asian flu” of 1957 and the

1968 “Hong Kong flu”. The 21st century has seen four further pandemicoutbreaks: SARS in

2002; “bird flu” in 2009; MERS in 2012;and Ebola which peaked in 2013–2014 (Baldwin and

Weder di Mauro, 2020).

Considering such a repetitive pattern of pandemics, one might wonder why anexplosion of

COVID-19 is a distinctive and notable phenomenon. Does this coronavirus outbreak differ

sufficiently enough from other pandemics and natural disasters as to constitute a special

case for academic research? In addition, exactly how are private firms navigating the

economic disruptions resulting from the spread of COVID-19 and worldwide lockdowns?

Olga Golubeva is based at

Stockholm Business

School, Stockholm

University, Stockholm,

Sweden.

Received 11 September 2020

Revised 9 February 2021

27 February 2021

Accepted 1 March 2021

Olga GolubevaPublished by

Emerald Publishing Limited.

This article is published under

the Creative Commons

Attribution (CC BY 4.0) licence.

Anyone may reproduce, distrib-

ute, translate and create deriva-

tive works of this article (for

both commercial and non-com-

mercial purposes), subject to

full attribution to the original

publication and authors. The

full terms of this licence maybe

seen at http://creativecom-

mons.org/licences/by/4.0/

legalcode

The author of the paper would

like to express gratitude to

Professor Gabriel Eweje and

anonymous peer-reviewers for

their valuable suggestions and

general guidance during the

review process. The author is

also indebted to Dr Alan Wood

(UK) for proofreading

assistance.

DOI 10.1108/CG-09-2020-0405 VOL. 21 NO. 6 2021, pp. 1011-1027, Emerald Publishing Limited., ISSN 1472-0701 jCORPORATE GOVERNANCE jPAGE 1011

Which factors are most appropriate for assessing the effects of COVID-19 on company

performance?

Organisations often face crises, but the COVID-19 pandemic may be unique given its

speed of change and the scale of its impact on both private and public segments of the

economy (Mather, 2020;Kells, 2020). The COVID-19 outbreak has triggered a $2.2tn

bailout package in the USA versus that country’s $750bn package during the previous

global financial crisis (Bongini et al., 2019). This response greatly exceeds the economic

effects which arose from the 1918 “Spanish Influenza” epidemic, according to Barro et al.

(2020).

While there have been numerous studies which focus on past events that roughly parallel

the consequences of the COVID-19 pandemic, there is an additional avenue to investigate:

How business mobilisation may differ in responding to the unprecedented scale of the

pandemic crisis. The early literature highlights both the enormous economic and social

impacts of the COVID-19 outbreak with respect to financial markets, institutions and public

policy (Goodell, 2020;Iyke, 2020;He and Harris, 2020). It also examines the effect that this

pandemic might have on organisations facing such challenging strategic decisions as

balancing employee and public health protections against operational costs and financial

returns (Parker, 2020;Rinaldiet al., 2020).

This paper explores the impact of firm-, finance- and country-specific indicators to the

performance of companies under the COVID-19 outbreak. This paper examines the recent

scant academic research regarding the impact of coronavirus pandemics alongside

literature on past events that, in some ways, are approximately comparable with COVID-19

(like previous epidemics,economic shocks and financial crises).

Our paper adds to the current research on firms’ performance as follows: firstly, a coronavirus

outbreak provides a unique setting of extreme uncertainty in which to examine the

performances of companies. The primary contribution of the study is the conceptualisa tion of a

performance model for enterprises during the COVID-19 crisis.

Secondly, this devastating outlierevent itself questions the suitability of current performance

measurements commonly appliedby companies. In this paper, we combine investigation of

traditional performance measurements with the testing of relatively novel variables (such as

business closures during COVID-19 and whether firms respond to the pandemic by

adjusting their business activities).

Thirdly, the COVID-19 pandemic has raised awareness of the importance of multiple factors

that impact firms’ performance (Kells, 2020;Obrenovic et al.,2020). Accordingly, we

respond to this call by investigating the link between company performance and firm-

specific characteristics; financial sources; and country-specific factors. To our knowledge,

this study is the first to investigate the simultaneous impact of indicators, drawn from

multiple theories, on firms’ performancesduring the coronavirus pandemic.

Finally, given that the COVID-19 crisis extends across different countries, our study

analyses a data set, collected by the World Bank Enterprise Surveys (WBES) for 13

countries: Albania, Chad, Cyprus, Georgia, Greece, Guinea, Italy, Moldova, Niger, Russia,

Togo, Zambia and Zimbabwe [1]. Our study is among the first to apply an international

balanced data set, compiled with the intention of being representative with respect to firm

size, business sector andgeographic region (see Chapter 3).

The paper reports that sector, firm size, participation in exports and market de mand for

companies’ products may all impact company performance during the COVID-19 out break.

The empirical evidence suggests that equity contributions, followed by firms’ cash ba lances

and debt financing, are among the more robust solutions during the coro navirus pandemic

period. Support by a government, however, has not materialised as a significant financing

source. In view of funds being established by governments to help firms du ring the pandemic,

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