Does the Covid-19 pandemic affect the financial performance of corporations? Empirical evidence from Indonesia

Abstract

The purpose of this study is to empirically analyze the performance of liquidity, leverage, profitability, and activities of firms on the Indonesia Stock Exchange during the Covid-19 pandemic based on a quantitative approach. This study uses secondary data from financial reports of firms listed on the Indonesia Stock Exchange that are included in the LQ45 index, which represents the movement of the capital market based on specific criteria. The results reveal that the Covid-19 pandemic has hurt the Indonesian firm’s financial performance. The worst condition has increased the leverage ratio, and the profitability and activity ratio declined, as experienced in several emerging countries. The findings of this research can be a bunch of information for investors in making decisions that these financial ratios are sensitive to economic volatility. In addition, this finding also adds insight to the company's management, especially LQ45 companies, that the company is expected to be able to maintain its financial fundamentals of these ratios. Further research needs to be carried out on how the effects of the Covid-19 pandemic influence financial performance according to the sector type of the firm and conducted in more time series periods.