The Impact of Financial Performance on Firm’s Value During Covid-19 Pandemic for Companies Listed in the Palestine Exchange (2019-2020)
Aref Abu Asa’d, Israa
An Najah National University
The results of the corporate financial performance assessment are key pillars of decision-making for the investor with many investment opportunities available and whether the company has the capacity to generate value as well as continuity for the future. Therefore, performance increases in significance particularly during successive financial crises, most recently Covid-19, which is a complicated pandemic that affects health and financial aspects. The study examines whether Covid19 pandemic has an impact on the relationship between the financial performance of companies in return to assets, equity, and EPS and the company value with regard to stock return, Tobin Q ratio, P/E ratio by using the multi-variable regression equation on a group of 36 companies out of 46 ones listed in the Palestine Exchange, however, ten of which were excluded due to lack of data during the period 2019-2020. This study has also found no effect of the Covid19 pandemic on the relationship between the financial performance (ROA, ROE, EPS) and the company’s value (stock return), but it was turned out that the Covid19 pandemic had significant effect weakening the relationship between financial performance (ROA, ROE, EPS) and the company value (Tobin’s Q), and it also had a significant impact on the relationship between the financial performance (ROA, ROE) and the company's value (P/E ratio) as the results showed that the relationship is negative. The study recommended conducting additional studies to examine the impact of the Covid-19 pandemic and its impact on the economy and stock prices of companies in the Palestine Exchange to deal with future studies on the dimensions of unemployment and inflation, which is one of the most prominent consequences of the pandemic. In addition, researchers should take into account in their future research a greater sample size and a longer period of time while studying the impact of the Covid19 pandemic. It also motivates researchers to study additional mechanisms and indicators other than profitability indicators of financial performance such as debt indicators, liquidity and others.
Financial performance , Firm value, Covid-19 (Corona) , Palestine Exchange.