Main Article Content
Abstract
Abstract. To prevent the spread of the COVID-19 pandemic, the government has had some large-scale social restrictions (LSSR). As a side effect, many firms experienced a decrease in their revenues, which will decrease their financial performance. This research seeks to investigate how the COVID-19 pandemic affects financial performance of companies listed in the Indonesian stock exchange. To analyze the effect of the COVID-19 pandemic, an ordinary least square (OLS) regression is employed with a dummy variable of the period before and after the pandemic started. Furthermore, to examine the causal effect of LSSR, this study uses the difference-in-difference method with a dummy variable whether the businesses could still operate during the LSSR. The results show that COVID-19 pandemic has a significant negative effect on firms’ financial performance represented by ROA. Secondly, by employing panel-data regression with difference-in-difference, it is found that the LSSR has an insignificant effect on firms’ performance in affected firms. From the results, this research can contribute to the literature to see the effect of the large-scale social restrictions on firms’ financial performance. This research also can be used as a consideration for the government in making future policies to prevent the spread of the COVID-19 pandemic.
Keywords: COVID-19 pandemic, difference-in-difference, firms’ financial performance, large-scale social restrictions
Keywords
COVID-19 pandemic
difference-in-difference
firms’ financial performance
large-scale social restrictions
Article Details
License
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License. Copyright @2017. This is an open-access article distributed under the terms of the Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License (http://creativecommons.org/licenses/by-nc-sa/4.0/) which permits unrestricted non-commercial used, distribution and reproduction in any medium
How to Cite
Fikri, M., & Noveria, A. (2021). Does Large-scale Social Restriction Affect Firms’ Financial Performance?. The Asian Journal of Technology Management (AJTM), 14(3), 245–255. https://doi.org/10.12695/ajtm.2021.14.3.4
References
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Anh, D. L. T., & Gan, C. (2021). The impact of the COVID-19 lockdown on stock market performance: evidence from Vietnam. Journal of Economic Studies, 48(4), 836–851. doi: 10.1108/JES-06-2020-0312
Anwar, M. C. (2020, April 7). Catat! Ini 8 Sektor yang Diizinkan Anies Beroperasi Saat PSBB. CNBC Indonesia. https://www.cnbcindonesia.com/news/20200408102241-4-150513/catat-ini-8-sektor-yang-diizinkan-anies-beroperasi-saat-psbb
Atahau, A. D. R., & Cronje, T. (2021). What drives the performance of different bank-ownership types in Indonesia? The pre- and post-GFC analysis. International Journal of Productivity and Performance Management, ahead-of-print(ahead-of-print). doi: 10.1108/IJPPM-03-2020-0096
Badan Pusat Statistik. (2020). Analisis Hasil Survei Dampak Covid-19 Terhadap Pelaku Usaha.
Cejnek, G., Randl, O., & Zechner, J. (2020). The COVID-19 Pandemic and Corporate Dividend Policy. SSRN Electronic Journal. doi: 10.2139/ssrn.3576967
Cho, B., & Saki, Z. (2021). Firm performance under the COVID-19 pandemic: The case of the U.S. textile and apparel industry. The Journal of The Textile Institute. https://doi.org/10.1080/00405000.2021.1943258
Clark, J., Mauck, N., & Pruitt, S. W. (2021). The financial impact of COVID-19: Evidence from an event study of global hospitality firms. Research in International Business and Finance, 58. doi: 10.1016/j.ribaf.2021.101452
Duan, Y., & Niu, J. (2020). Liquidity creation and bank profitability. The North American Journal of Economics and Finance, 54, 101250. doi: 10.1016/j.najef.2020.101250
Erfani, G., & Vasigh, B. (2018). The impact of the global financial crisis on profitability of the banking industry: A comparative analysis. Economies, 6(4). doi: 10.3390/economies6040066
Fredriksson, A., & O liveira, G. M. de. (2019). Impact evaluation using Difference-in-Differences. RAUSP Management Journal, 54(4). doi: 10.1108/RAUSP-05-2019-0112
Hasan, N. A., Heal, R. D., Bashar, A., Bablee, A. L., & Haque, M. M. (2021). Impacts of COVID-19 on the finfish aquaculture industry of Bangladesh: A case study. Marine Policy, 130. doi: 10.1016/j.marpol.2021.104577
Hotchkiss, E. S., Nini, G., & Smith, D. C. (2020). Corporate Capital Raising During the COVID Crisis. SSRN Electronic Journal. doi: 10.2139/ssrn.3723001
Hu, S., & Zhang, Y. (2021). COVID-19 pandemic and firm performance: Cross-country evidence. International Review of Economics & Finance, 74. doi: 10.1016/j.iref.2021.03.016
Huang, H., & Ye, Y. (2021). Rethinking capital structure decision and corporate social responsibility in response to COVID‐19. Accounting & Finance. doi: 10.1111/acfi.12740
Husain, A., & Abdulla, Y. (2020, November 8). Payout Decision pre- and during COVID-19: Evidence from Bahrain. 2020 International Conference on Decision Aid Sciences and Application (DASA). doi: 10.1109/DASA51403.2020.9317115
Khatib, S. F. A., & Nour, A.-N. I. (2021). The Impact of Corporate Governance on Firm Performance During The COVID-19 Pandemic: Evidence from Malaysia. Journal of Asian Finance, Economics and Business, 8(2), 943–952.
Krieger, K., Mauck, N., & Pruitt, S. W. (2020). The impact of the COVID-19 pandemic on dividends. Finance Research Letters. doi: 10.1016/j.frl.2020.101910
Lai, H. Y., Aziz, A. R. A., & Chan, T. K. (2014). Effect of the global financial crisis on the financial performance of public listed construction companies in Malaysia. Journal of Financial Management of Property and Construction, 19(3), 246–263. doi: 10.1108/JFMPC-02-2014-0002
Pettenuzzo, D., Sabbatucci, R., & Timmermann, A. (2021). How to Outlast a Pandemic: Corporate Payout Policy and Capital Structure Decisions During COVID-19. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3823258
Qin, X., Huang, G., Shen, H., & Fu, M. (2020). COVID-19 pandemic and firm-level cash holding—Moderating effect of goodwill and goodwill impairment. Emerging Markets Finance and Trade, 56(10), 2243–2258. doi: 10.1080/1540496X.2020.1785864
Rababah, A., Al‐Haddad, L., Sial, M. S., Chunmei, Z., & Cherian, J. (2020). Analyzing the effects of COVID‐19 pandemic on the financial performance of Chinese listed companies. Journal of Public Affairs. https://doi.org/10.1002/pa.2440
Sharma, A., Adhikary, A., & Borah, S. B. (2020). Covid-19′s impact on supply chain decisions: Strategic insights from NASDAQ 100 firms using Twitter data. Journal of Business Research, 117. doi: 10.1016/j.jbusres.2020.05.035
Shen, H., Fu, M., Pan, H., Yu, Z., & Chen, Y. (2020). The Impact of the COVID-19 Pandemic on Firm Performance. Emerging Markets Finance and Trade, 56(10). doi: 10.1080/1540496X.2020.1785863
Wahyudi, E. (2020, July 14). PHRI: Sektor Pariwisata Rugi Rp 85,7 Triliun Akibat Pandemi - Bisnis Tempo.co. Tempo. https://bisnis.tempo.co/read/1365055/phri-sektor-pariwisata-rugi-rp-857-triliun-akibat-pandemi/full&view=ok
References
Alfaro, L., Chari, A., Greenland, A., & Schott, P. (2020). Aggregate and Firm-Level Stock Returns During Pandemics, in Real Time (No. 26950). doi: 10.3386/w26950
Anh, D. L. T., & Gan, C. (2021). The impact of the COVID-19 lockdown on stock market performance: evidence from Vietnam. Journal of Economic Studies, 48(4), 836–851. doi: 10.1108/JES-06-2020-0312
Anwar, M. C. (2020, April 7). Catat! Ini 8 Sektor yang Diizinkan Anies Beroperasi Saat PSBB. CNBC Indonesia. https://www.cnbcindonesia.com/news/20200408102241-4-150513/catat-ini-8-sektor-yang-diizinkan-anies-beroperasi-saat-psbb
Atahau, A. D. R., & Cronje, T. (2021). What drives the performance of different bank-ownership types in Indonesia? The pre- and post-GFC analysis. International Journal of Productivity and Performance Management, ahead-of-print(ahead-of-print). doi: 10.1108/IJPPM-03-2020-0096
Badan Pusat Statistik. (2020). Analisis Hasil Survei Dampak Covid-19 Terhadap Pelaku Usaha.
Cejnek, G., Randl, O., & Zechner, J. (2020). The COVID-19 Pandemic and Corporate Dividend Policy. SSRN Electronic Journal. doi: 10.2139/ssrn.3576967
Cho, B., & Saki, Z. (2021). Firm performance under the COVID-19 pandemic: The case of the U.S. textile and apparel industry. The Journal of The Textile Institute. https://doi.org/10.1080/00405000.2021.1943258
Clark, J., Mauck, N., & Pruitt, S. W. (2021). The financial impact of COVID-19: Evidence from an event study of global hospitality firms. Research in International Business and Finance, 58. doi: 10.1016/j.ribaf.2021.101452
Duan, Y., & Niu, J. (2020). Liquidity creation and bank profitability. The North American Journal of Economics and Finance, 54, 101250. doi: 10.1016/j.najef.2020.101250
Erfani, G., & Vasigh, B. (2018). The impact of the global financial crisis on profitability of the banking industry: A comparative analysis. Economies, 6(4). doi: 10.3390/economies6040066
Fredriksson, A., & O liveira, G. M. de. (2019). Impact evaluation using Difference-in-Differences. RAUSP Management Journal, 54(4). doi: 10.1108/RAUSP-05-2019-0112
Hasan, N. A., Heal, R. D., Bashar, A., Bablee, A. L., & Haque, M. M. (2021). Impacts of COVID-19 on the finfish aquaculture industry of Bangladesh: A case study. Marine Policy, 130. doi: 10.1016/j.marpol.2021.104577
Hotchkiss, E. S., Nini, G., & Smith, D. C. (2020). Corporate Capital Raising During the COVID Crisis. SSRN Electronic Journal. doi: 10.2139/ssrn.3723001
Hu, S., & Zhang, Y. (2021). COVID-19 pandemic and firm performance: Cross-country evidence. International Review of Economics & Finance, 74. doi: 10.1016/j.iref.2021.03.016
Huang, H., & Ye, Y. (2021). Rethinking capital structure decision and corporate social responsibility in response to COVID‐19. Accounting & Finance. doi: 10.1111/acfi.12740
Husain, A., & Abdulla, Y. (2020, November 8). Payout Decision pre- and during COVID-19: Evidence from Bahrain. 2020 International Conference on Decision Aid Sciences and Application (DASA). doi: 10.1109/DASA51403.2020.9317115
Khatib, S. F. A., & Nour, A.-N. I. (2021). The Impact of Corporate Governance on Firm Performance During The COVID-19 Pandemic: Evidence from Malaysia. Journal of Asian Finance, Economics and Business, 8(2), 943–952.
Krieger, K., Mauck, N., & Pruitt, S. W. (2020). The impact of the COVID-19 pandemic on dividends. Finance Research Letters. doi: 10.1016/j.frl.2020.101910
Lai, H. Y., Aziz, A. R. A., & Chan, T. K. (2014). Effect of the global financial crisis on the financial performance of public listed construction companies in Malaysia. Journal of Financial Management of Property and Construction, 19(3), 246–263. doi: 10.1108/JFMPC-02-2014-0002
Pettenuzzo, D., Sabbatucci, R., & Timmermann, A. (2021). How to Outlast a Pandemic: Corporate Payout Policy and Capital Structure Decisions During COVID-19. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3823258
Qin, X., Huang, G., Shen, H., & Fu, M. (2020). COVID-19 pandemic and firm-level cash holding—Moderating effect of goodwill and goodwill impairment. Emerging Markets Finance and Trade, 56(10), 2243–2258. doi: 10.1080/1540496X.2020.1785864
Rababah, A., Al‐Haddad, L., Sial, M. S., Chunmei, Z., & Cherian, J. (2020). Analyzing the effects of COVID‐19 pandemic on the financial performance of Chinese listed companies. Journal of Public Affairs. https://doi.org/10.1002/pa.2440
Sharma, A., Adhikary, A., & Borah, S. B. (2020). Covid-19′s impact on supply chain decisions: Strategic insights from NASDAQ 100 firms using Twitter data. Journal of Business Research, 117. doi: 10.1016/j.jbusres.2020.05.035
Shen, H., Fu, M., Pan, H., Yu, Z., & Chen, Y. (2020). The Impact of the COVID-19 Pandemic on Firm Performance. Emerging Markets Finance and Trade, 56(10). doi: 10.1080/1540496X.2020.1785863
Wahyudi, E. (2020, July 14). PHRI: Sektor Pariwisata Rugi Rp 85,7 Triliun Akibat Pandemi - Bisnis Tempo.co. Tempo. https://bisnis.tempo.co/read/1365055/phri-sektor-pariwisata-rugi-rp-857-triliun-akibat-pandemi/full&view=ok
Anh, D. L. T., & Gan, C. (2021). The impact of the COVID-19 lockdown on stock market performance: evidence from Vietnam. Journal of Economic Studies, 48(4), 836–851. doi: 10.1108/JES-06-2020-0312
Anwar, M. C. (2020, April 7). Catat! Ini 8 Sektor yang Diizinkan Anies Beroperasi Saat PSBB. CNBC Indonesia. https://www.cnbcindonesia.com/news/20200408102241-4-150513/catat-ini-8-sektor-yang-diizinkan-anies-beroperasi-saat-psbb
Atahau, A. D. R., & Cronje, T. (2021). What drives the performance of different bank-ownership types in Indonesia? The pre- and post-GFC analysis. International Journal of Productivity and Performance Management, ahead-of-print(ahead-of-print). doi: 10.1108/IJPPM-03-2020-0096
Badan Pusat Statistik. (2020). Analisis Hasil Survei Dampak Covid-19 Terhadap Pelaku Usaha.
Cejnek, G., Randl, O., & Zechner, J. (2020). The COVID-19 Pandemic and Corporate Dividend Policy. SSRN Electronic Journal. doi: 10.2139/ssrn.3576967
Cho, B., & Saki, Z. (2021). Firm performance under the COVID-19 pandemic: The case of the U.S. textile and apparel industry. The Journal of The Textile Institute. https://doi.org/10.1080/00405000.2021.1943258
Clark, J., Mauck, N., & Pruitt, S. W. (2021). The financial impact of COVID-19: Evidence from an event study of global hospitality firms. Research in International Business and Finance, 58. doi: 10.1016/j.ribaf.2021.101452
Duan, Y., & Niu, J. (2020). Liquidity creation and bank profitability. The North American Journal of Economics and Finance, 54, 101250. doi: 10.1016/j.najef.2020.101250
Erfani, G., & Vasigh, B. (2018). The impact of the global financial crisis on profitability of the banking industry: A comparative analysis. Economies, 6(4). doi: 10.3390/economies6040066
Fredriksson, A., & O liveira, G. M. de. (2019). Impact evaluation using Difference-in-Differences. RAUSP Management Journal, 54(4). doi: 10.1108/RAUSP-05-2019-0112
Hasan, N. A., Heal, R. D., Bashar, A., Bablee, A. L., & Haque, M. M. (2021). Impacts of COVID-19 on the finfish aquaculture industry of Bangladesh: A case study. Marine Policy, 130. doi: 10.1016/j.marpol.2021.104577
Hotchkiss, E. S., Nini, G., & Smith, D. C. (2020). Corporate Capital Raising During the COVID Crisis. SSRN Electronic Journal. doi: 10.2139/ssrn.3723001
Hu, S., & Zhang, Y. (2021). COVID-19 pandemic and firm performance: Cross-country evidence. International Review of Economics & Finance, 74. doi: 10.1016/j.iref.2021.03.016
Huang, H., & Ye, Y. (2021). Rethinking capital structure decision and corporate social responsibility in response to COVID‐19. Accounting & Finance. doi: 10.1111/acfi.12740
Husain, A., & Abdulla, Y. (2020, November 8). Payout Decision pre- and during COVID-19: Evidence from Bahrain. 2020 International Conference on Decision Aid Sciences and Application (DASA). doi: 10.1109/DASA51403.2020.9317115
Khatib, S. F. A., & Nour, A.-N. I. (2021). The Impact of Corporate Governance on Firm Performance During The COVID-19 Pandemic: Evidence from Malaysia. Journal of Asian Finance, Economics and Business, 8(2), 943–952.
Krieger, K., Mauck, N., & Pruitt, S. W. (2020). The impact of the COVID-19 pandemic on dividends. Finance Research Letters. doi: 10.1016/j.frl.2020.101910
Lai, H. Y., Aziz, A. R. A., & Chan, T. K. (2014). Effect of the global financial crisis on the financial performance of public listed construction companies in Malaysia. Journal of Financial Management of Property and Construction, 19(3), 246–263. doi: 10.1108/JFMPC-02-2014-0002
Pettenuzzo, D., Sabbatucci, R., & Timmermann, A. (2021). How to Outlast a Pandemic: Corporate Payout Policy and Capital Structure Decisions During COVID-19. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3823258
Qin, X., Huang, G., Shen, H., & Fu, M. (2020). COVID-19 pandemic and firm-level cash holding—Moderating effect of goodwill and goodwill impairment. Emerging Markets Finance and Trade, 56(10), 2243–2258. doi: 10.1080/1540496X.2020.1785864
Rababah, A., Al‐Haddad, L., Sial, M. S., Chunmei, Z., & Cherian, J. (2020). Analyzing the effects of COVID‐19 pandemic on the financial performance of Chinese listed companies. Journal of Public Affairs. https://doi.org/10.1002/pa.2440
Sharma, A., Adhikary, A., & Borah, S. B. (2020). Covid-19′s impact on supply chain decisions: Strategic insights from NASDAQ 100 firms using Twitter data. Journal of Business Research, 117. doi: 10.1016/j.jbusres.2020.05.035
Shen, H., Fu, M., Pan, H., Yu, Z., & Chen, Y. (2020). The Impact of the COVID-19 Pandemic on Firm Performance. Emerging Markets Finance and Trade, 56(10). doi: 10.1080/1540496X.2020.1785863
Wahyudi, E. (2020, July 14). PHRI: Sektor Pariwisata Rugi Rp 85,7 Triliun Akibat Pandemi - Bisnis Tempo.co. Tempo. https://bisnis.tempo.co/read/1365055/phri-sektor-pariwisata-rugi-rp-857-triliun-akibat-pandemi/full&view=ok