Analyzing the effects of COVID‐19 pandemic on the financial performance of Chinese listed companies

• Published date: 01 November 2020
• Author: Abedalqader Rababah,Lara Al‐Haddad,Muhammad Safdar Sial,Zheng Chunmei,Jacob Cherian
• Date: 01 November 2020
• DOI: http://doi.org/10.1002/pa.2440

ACADEMIC PAPER

Analyzing the effects of COVID-19 pandemic on the financial

performance of Chinese listed companies

Abedalqader Rababah

1

|Lara Al-Haddad

2

|Muhammad Safdar Sial

3

|

Zheng Chunmei

4,5

|Jacob Cherian

6

1

Accounting Department, Sohar University,

Sohar, Oman

2

Department of Finance and Banking Sciences,

Yarmouk University, Irbid, Jordan

3

Department of Management Sciences,

COMSATS University Islamabad, Islamabad,

Pakistan

4

School of Economics and Management,

Wuhan University, Wuhan, China

5

Yunnan College of Business Management,

Kunming City, China

6

College of Business, Abu Dhabi University,

Abu Dhabi, United Arab Emirates

Correspondence

Muhammad Safdar Sial, Department of

Management Sciences, COMSATS University

Islamabad, Islamabad, Pakistan.

Email: safdar.sial786@gmail.com

This study is aimed at analyzing the effects of COVID-19 pandemic on the financial

performance of Chinese listed companies. We applied pooled ordinary least square

(OLS) regression as a baseline methodology to determine the effects of COVID pan-

demic on the financial performance of Chinese listed companies. We found that the

small- and medium-sized companies are most affected by this pandemic, in addition to

that our analysis has revealed that serious-impact areas and industries which were

worst hit by the COVID-19 experienced a sharper decline in financial performance as

compared to other industries. The findings of this study have broad implications for

policymakers, as it is evident that governments, banks, regulatory bodies, and central

banks must combine forces to tackle the financial and economic impacts of COVID-19

crises. They should come up with comprehensive policies to tackle the adverse impact

of such crises in the future as well. Actions such as proving loans and rescheduling

existing loans to worst-hit sectors such as tourism, airline industry, etc. are starting

point. The disclosure of facts and figure by officials regarding the status of health care

number of infections can reduce the chancesof panic situations in the future.

1|INTRODUCTION

The present COVID-19 pandemic has its origins in Wuhan China the

first official case, as per WHO

1

reports were December 31, 2019. The

rapid speared of the virus can mainly be attributed to the fact that a

large number of people moved from Wuhan to other parts of China to

celebrate the Chinese New Year by mid of January 2020. This made

the situation worse as the rapid spread of the virus epidemic situation

turned in to the emergency and the Chinese government responded

by imposing a complete travel ban by January 23, 2020 in the Wuhan

region, but it was too late as the spread of the virus was rapid due to

its contagious nature. This was followed by a declaration on interna-

tional health emergency by WHO on January 30, 2020, as the virus

had spread to other parts of the world and now the COVID-19 epi-

demic had become pandemic. One has to keep in mind that this is

sixth-time such action has been taken. These include Ebola and Zika

virus outbreaks in the Democratic Republic of Congo. The scientific

analysis of the virus by Chinese scientist concluded that COVID-19

belonged to a family of viruses known as CORONA viruses, the

viruses belonging to this family had earlier caused SARS and MERS

pandemics.

The symptoms of COVID-19 may vary from 2 to 14 daysafter

the contraction of the virus via physical exposure as per the CDC.

A person can contract this virus via physical contact or via contact

with any object used by a person who is already infected. This poses

an issue of controlling the spread of the virus at initial stages as

unknowingly the people who have already caught the virus might not

even know until symptoms start showing. The severity and contagion

effect of led to its spread outside China and assessing the situation

WHO on March 11, 2020, declared it a global pandemic. Although the

rate of mortality from COVID-19 is much lower as compared to that

of other viruses. At the same time, the spread of the virus is phenom-

enal and as on March 23, 2020 the number of COVID-19 cases in the

USA was 31,573, in Italy, the cases were 59,138 and in China, the

number was 19,81,601 as per world health organization (WHO). As

per Centre of Disease Control and Prevention (CDC), at present, there

is no known vaccine for the disease and researchers are trying day

and night to come up with a vaccine to tackle the spread of the virus

Received: 17 August 2020Revised: 22 August 2020Accepted: 24 August 2020

DOI: 10.1002/pa.2440

J Public Affairs. 2020;20:e2440.wileyonlinelibrary.com/journal/pa© 2020 John Wiley & Sons Ltd1of6

https://doi.org/10.1002/pa.2440