Abstract
The coronavirus (COVID-19) pandemic devastated all economies across the world and triggered a deterioration in firms’ financial performance. However, some sectors turned out to be more vulnerable while others continued to perform well during the crisis period. Given this fact, we conducted a comprehensive study to estimate the impact of the COVID-19 pandemic on firms’ profitability in Europe. We used a dynamic panel data approach and a system generalized method of moment (System-GMM) model to investigate (i) which sectors were affected and what was the magnitude of the impact on firms’ profitability, and (ii) whether the stringency of anti-pandemic policies such as workplace closures and travel bans impacted firms unevenly. We find that COVID-19 caused about a 25% decline in the profitability of firms. The most impacted sectors were Consumer Discretionary, Consumer Staples, and Industrials, where profitability declined from 20 to 48%. We also find that firms in countries with high anti-pandemic policy stringency lost about 19% more in profitability than in the rest of the countries in Europe during 2020.
Subject
Management, Monitoring, Policy and Law,Renewable Energy, Sustainability and the Environment,Geography, Planning and Development,Building and Construction
Cited by
7 articles.
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