Financial Distress and Firm Performance: Evidence from COVID-19.
DOI:
https://doi.org/10.33736/uraf.3526.2021Keywords:
COVID-19, Firm performance, leverage, debt, Modigliani-Miller TheoremAbstract
This study is dedicated to discovering the impact of COVID-19 on Malaysia’s plantation industry firms. This paper uses quarterly data from annual report of 39 listed firms from Malaysia from 2018 to 2020. The variables to measure financial distress are debt ratio and debt-to-equity ratio while the measurement for firm performance is return on assets. The findings shows that there is a significant negative relationship between debt-to-equity ratio on firm performance. This indicates that the increase in debt-to-equity ratio results in a significant decrease in return on total assets. On the other hand, positive correlation exists between debt ratio and firm performance. This means that an increase in debt ratio results in an increase in the return value of total assets.
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