How government intervention has impacted companies’ financial performance & financial stand during covid-time

Abstract

Following the unprecedented outbreak of Covid-19, many companies have been placed in a situation of being struggled with business continuity and financial pressure. The research aims to discover if certain companies, from severely impacted industries including restaurant, transportation, and tourism and leisure, received proper financial support and assistance from governments and to evaluate the financial impact of those measures. Eventually, we hope to provide values to companies helping them understand how government support can help company financially and raise their awareness to standardize their reporting quality on disclosures regarding state aid package. We also want to support policy makers to learn whether the implemented aid package achieved desired outcome or any improvement potentials in designing the support strategy. Lastly, we’d also like to provide insights to other readers about our interpretation on the state aid in an approach by visualizing company’s financial outcome with and without government support, as a comparison.

Sample companies are all publicly traded to secure accessibility of the data, and information were obtained completely from their released interim and year-end financial statements and annual reports. Findings were concluded from case studies on an explorative way of manner. First, the extensive exploration on the reports confirmed four major types of support and assistance amid a crisis, including employees related scheme, tax relief, grants and compensations, and state-backed financing facilities. Secondly, the financial impact of the support was assessed and simulated for the scenario without such support, providing a visualized view on company level and evidence for less-sufficiency and less-efficiency of government support, broadly speaking.

Main findings and conclusions are consistent with existing research and have provided further empirical evidence. The theoretical contribution comes from observation of 30 listed companies with concrete findings. In terms of the practical contribution, the way of the financial impact being studied provided a new perspective of measuring government support and empirical evidence of determining whether the support package has reached their intended purpose or not and room for improvement. Limitations were also discussed, particularly, size and types of data sample and transparency of disclosed information, and suggestions were given for future study to remedy these limitations.