The Impact of Firm Characteristics on Firm Performance During the Covid-19 Pandemic: Evidence from Saudi Arabia

Abstract

This study aims to examine the impact of firm characteristics on the operational, financial, and market performance of Saudi listed firms during the COVID-19 pandemic. This study applies a number of regression models over the period from Q3 2019 to Q3 2020, thereby enabling the examination of key drivers in the pre- and post-crisis periods. We find that the operational, financial, and market performance measures all saw a significant drop with the onset of the COVID-19 pandemic. The models show that larger firms displayed better performance both before and after the pandemic, though there is some evidence of a weakening of this relation for return on equity (ROE) with the onset of the pandemic. Leverage is a clear negative driver of firm performance across the three measures both before and after the onset of the pandemic, though there is evidence that the effect strengthens after the crisis. Neither sales revenue scale nor firm liquidity exerts a significant impact on firm performance measures. Certain industry types, such as materials (petrochemicals), consumer services, real estate, and consumer durables & apparel appear most affected by the pandemic. Surprisingly, the regression models do not show a significant impact on the scale of the performance measures with the onset of the pandemic. The results of this study have wide implications for decision-makers, illustrating the imperative for regulatory bodies, governments and central banks to combine forces to reduce the financial and economic impacts of the pandemic both now and in the future.