The impact of covid-19 on financial management: evidence from Romania

The COVID-19 pandemic has disrupted every facet of life globally. Business and commerce are key areas where the monetary crunch has been acutely felt. This study aims to analyze the various key changes in entities' activities to evaluate the level of business performance in response to the COVID-19 pandemic. For this purpose, we use panel data analysis on 218 Romanian listed companies of different sizes (big and small) and belonging to different business sectors for the period June 30, 2019-June 30, 2020. We find that the net profits of the overall market decreased by 37.43% over the analyzed period. However, small companies engaged in agriculture, commerce, construction, IT R&D, and transport and storage witnessed better financial performance. In addition, our results show that equity financing, proper liquidity management, and an increased company size consolidate the economic performance of entities regarding return on equity and return on assets. Our findings are useful for policymakers such as managers and investors and can help them make the best decision for their managing or investing activities. Moreover, governments need to know how companies respond to the pandemic to identify the sectors of activity that are more vulnerable to the crisis' effects and the main financial management decisions that must be adopted by companies during times of crises.