This research aims to investigate the main drivers of financial performance during the COVID-19 outbreak, particularly the role of national government and firm policy in relation to the negative economic effects of the COVID-19 outbreak on firms' performance. A generalized linear model (GLM) has been conducted to test the influence of government assistance and cash holding on the financial performance of 79 firms listed in FTSE Italia over 2020. Likewise, our research adopts the Second Stage Least Squares Method (2SLS) and Generalized Method of Moments (GMM) to examine the moderating effect of cash held on the association between COVID-19 outbreak and firms' performance. Our results suggest that the Italian government aids their firms during the COVID-19 outbreak to support their financial performance, and firms themselves increase the level of cash holding to continue their operations as a crisis management policy to face the COVID-19 outbreak. Moreover, cash holding as a moderator weakens the negative impact of the COVID-19 outbreak on the financial firms' performance. Therefore, during the COVID-19 outbreak, national governments and firms should consider a crisis management policy to reduce the negative effects on the firms' performance, mainly government financial assistance and cash holdings to sustain firms' operations during the outbreak.