Turkish Journal of Computer and Mathematics Education Vol.12 No.

3(2021), 5072-5081
Research Article

Relationship between Covid-19 pandemic and firm’s performance towards

unemployment across countries

Noriza Mohd Saad a

a
1Fakulti Pengurusan dan Perniagaan,Universiti Teknologi MARA Cawangan Kelantan Kampus Machang,Bukit Ilmu, 18500
Machang, Kelantan, Malaysia
a
Email: Norizajasaad78@[Link]

Article History: Received: 10 November 2020; Revised 12 January 2021 Accepted: 27 January 2021; Published online: 5
April 2021
_____________________________________________________________________________________________________

Abstract: As a result of the consequences of the Covid-19 pandemic, stock market players issued their quick response on how
coronavirus has affected the performance of firms whereby most of the affected sectors are airlines, tourism, hotels,
transportation and many more. This has led to an increase in the unemployment rate worldwide. Considering this global issue,
this study was aimed at investigating the relationship between unemployment with a number of confirmed cases of Covid-19
and firms‘ performance as well as the controlling factors across seven (7) countries. Secondary data were utilized with the data
obtained from Bloomberg and Worldometers website. The dataset for dependent as proxy by unemployment rate and
explanatory variables proxies by COVID-19 and firm‘s performance were then tested using multivariate regression approach.
Finally, from the study, it is suggested that an increase in the number of Covid-19 cases will affect business performance as
controlled by macroeconomics factors which lead to a significant positive relationship between the unemployment rates in all
the countries of this study. This factor may affect the government‘s decision to implement the Movement Control Order
(MCO), for instance by the Malaysian Government. By Covid-19 vaccine development in the market nowadays, hopefully, the
spread can be mitigated and firms‘ performance can return to normalcy to avoid increasing rate of unemployment in the world.
Keywords: COVID-19; Firm‘s Performance; Unemployment, Robust Method, Countries
___________________________________________________________________________

1. Introduction
According to the World Health Organization (WHO), by 10 March 2020, Covid-19 had led to more than
110,000 confirmed infections and 4,015 deaths in 110 countries and the numbers are increasing rapidly. Due to
this extreme and drastic increase in the figure of confirmed infections and death cases, the WHO declared the
Covid-19 as a global pandemic. Subsequent to the WHO‘s declaration, the cumulative pattern of the number of
confirmed Covid-19 cases was shown statistically by Worldometers website on the 2nd of March 2021. There are
115,282,226 confirmed cases (see Figure 1), 91,100,130 recovered cases and 2,560,305 deaths in 221 countries.
The Covid-19 pandemic was first identified in China and was reported in Malaysia on the 25th of January 2020.
According to Malaysiakini news, based on data from the Ministry of Health Malaysia, the number of Covid-19
cases remained relatively low until a spike in cases was recorded in March 2020. However, within afew weeks
thereafter, Malaysia became the country with the highest cumulative number of confirmed Covid-19 infections in
South-East Asia at the end of March 2020 and within the month of April 2020.
Beginning from March 15, Malaysia saw a significant increase in active cases. The Prime Minister of Malaysia
held a live nationwide telecast on March 16, 2020, at 10:00 PM to announce the decision of the federal
government to implement the Movement Control Order (MCO). With the MCO put in place since March 18,
2020, all citizens were prohibited from leaving the country and foreigners also prohibited from entering the
country.

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 Relationship between Covid-19 pandemic and firm’s performance towards unemployment across countries

Figure 1: Total number of Covid-19 cases in the world from 22nd of January 2020 to 2nd of March 2021.
Sources: [Link] Date retrieved on 3rd March 2021.
In a statement to StarBiz, Bursa Malaysia said the Covid-19 pandemic has evolved from being a health issue to
potentially becoming a source of serious economic challenge. In early March, the FBM KLCI along with global
markets went through a roller coaster ride, with most markets registering a sharp decline of between 20 to 30%
following the first fallout from the Covid-19 virus. As a result of the consequences of the Covid-19 pandemic,
stock market players issued their quick response on how this virus has affected the business performance whereby
most of the affected sectors are airlines, tourism, hotels, transportation and many more. However, some of the
companies performed better or were still active in the trading at Bursa during this situation because the products
offered received high demands such as medicines and pharmaceuticals, and medical companies, utility,
information technology services, food and services, gas and water and so on. However, the majority of the stock
market players issued their quick response towards their trading performance that affected the stock price
performance for listed companies and for non-listed companies. Many small, medium and some large-scale
companies had to shut down their businesses which led to the retrenchment of many workers that increased the
level of unemployment.
With the MCO put in place since March 18, 2020, all citizens have been prohibited from leaving the country
and foreigners also prohibited from entering the country. As a consequence of the Covid-19 pandemic, stock
market players issued their quick response on how the coronavirus has affected their business performances
whereby most of the affected sectors are airlines, tourism, hotels, transportation and many more. However, stock
market regulators are still encouraging the stock market to remain open and they believe that investors can
diversify their portfolios towards risk and opportunities. This means that some of the sectors are underperformed
but some of them are outperformed.
As claimed by [2], Bursa Malaysia and other emerging stock markets will likely remain a laggard until June
2020, partly due to the outbreak of the Covid-19. The regional markets would be extremely weighed down if the
deadly Covid-19 is prolonged. Foreign investors had taken a cautious stance on Bursa particularly, amid the
negative headlines emanating from China. Bursa‘s benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) index
ended mixed yesterday amid profit-taking in heavyweights and bargain hunting in small-cap stocks as global
markets continued to face uncertainties. The index fell 1.17 points to 1,550.47 from Tuesday's close of
1,551.64[2].
In an interdependent and interconnected world, domestic confidence is not usually enough. A well run and
profitable company‘s performance that is stable for human capital and benefit will have to adjust accordingly
based on the external environments. For instance, stocks on Malaysia's stock exchange of Bursa Malaysia tumbled
during the outbreak as investors sold securities due to the expected economic impact caused by the Covid-19,
which along with other emerging stock markets was predicted to remain until June 2020. With China as
Malaysia's largest trading partner, the country's economy was directly impacted and economic experts warned that
the prolonged virus outbreak could hit hard the country‘s gross domestic product (GDP).
The country‘s economic growth may fall below 4% if the coronavirus outbreak worsens and powerhouses like
China and the US fail to halt the slides of their own economies. Countries across the world are already calculating
the billions of losses due to the Covid-19 which is the worst flu outbreak in 18 years. Trade-reliant economies like
South Korea, Singapore and Malaysia would be severely affected. The three countries had already felt the impact

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of the US-China trade war. China is Malaysia‘s largest trading partner and the cooling of the second-largest
economy in the world would definitely affect the country. The spread of the Covid-19 hits exports, factory output
and tourism. A Bloomberg poll of 33 economists estimated Malaysia‘s average growth of 4.2% with individual
forecasts ranging between 3.7 and 4.7%. One analyst expects that the coronavirus will hive 0.4% of Malaysia‘s
GDP [4].
Furthermore, China daily on the 19th of February, 2020 reported that Malaysia which also largely relied on
tourism and being among the top destinations for Chinese tourists, suffered a stark decline of tourist arrival from
Mainland China due to the outbreak with the tourism industry hit the hardest; costing around RM3.37 billion
losses until March. Malaysian states are highly dependent on the tourism sector and is the point for Mainland
Chinese visitors such as Johor [5] Malacca [6], Penang [7]. These states are among the heavily affected states with
hotel bookings and food stalls reported to experience large loss in businesses. These subsequently forced the states
to shift their focus to the Southeast Asian market due to the decline of Mainland Chinese tourists [8][9].
Regardless of the large losses incurred by tourism businesses, a number of Malaysians have voiced their
concerns over the spread of the virus and urging a ban on travellers from China to the country with some 149,000
in support of the call [10][11]. Aberdeen Standard Investments of Malaysia also predicted the country‘s currency,
the Malaysian ringgit (MYR), to weaken further throughout the local and worldwide outbreak which exacerbate
further by unstable local political scenes in the country [12].
With respect to the issues discussed in this introduction part, this study was motivated to investigate the
relationship between the unemployment rate with a number of confirmed cases of the Covid-19 pandemic and
business firm‘s performance controlled by GDP growth, inflation rate and interest rate across selected seven
countries.
Next, the paper is organized as follows. In the next section, discussion about the issues that arise concerning
unemployment and firm‘s performance, affected by the number of confirmed cases of Covid-19 abroad. The
succeeding section explains the data and methodology applied, followed by the results and discussion in the
succeeding section. The last section highlights the policy implications of the employment issues which concludes
the paper.
[Link] Review
Vast literature reported on firms‘ performance by many proxies for instance profitability, sales, firm size,
leverage level, total asset, shareholdings equity and others. In this study, the firm‘s performance is limited only to
the discussion on the capital structure which consists of the market value of the common share and debt to their
proposition with book value of total assets. This performance can be derived as a firm value of the company that is
basically based on how companies create their financing structure by issuing equity and bonds to optimize the
capital structure for business survival. The survival of the companies especially during the Covid-19 pandemic,
with robust macroeconomics situations, is important for a secured job and human capital development. An
unstable firm‘s performance sometimes forces the employees to resign or quit from the job.
Zakaria Firano and Filali Adib Fatine (2020) mentioned that the Covid-19 pandemic could affect all the world
economies and the reaction is to strengthen each country on the planet, even to varying degrees. They also
highlighted that nowadays, amid a health crisis, countries are thinking of reducing containment constraints in
order to seek the optimal circulation of resources and limit the obstacles to the circulation of money. Thus, all
countries are seeking to optimise the balance between health and economic well-being, which is quite difficult
under the current conditions. Overall, their results show that economic conditions tend to deteriorate, especially as
socio-economic relations become closer.
Besides the socio-economic relations, both microeconomic and macroeconomic factors affect the business
performance; it is imperative that businesses are aware of these factors in order to reduce the impact of these on
future cash flows and profitability. Microeconomic factors such as demand and factors of production are
controllable and the effect of which can easily be anticipated and controlled. However, macroeconomic variables
especially the unemployment rates, are beyond the control of an organization, therefore, there is the need for
businesses to predict the heterogeneous effect of these macroeconomic variables on future corporate performances
(Broadstock, Shu, and Xu, 2011).
Therefore, the 2020 Covid-19 crisis have spurred research on firms‘ corporate finance decisions and their
macroeconomic implications (Brunnermeier and Krishnamurthy, 2020). A negative correlation was found
between the market price of capital and inflation. It does this in an endogenous growth environment where human
capital is a major driver of growth by considering the firm value as a proxy by Tobin‘s Q in the q-inflation-growth
relationship. The importance of this is that there is an emerging literature that shows how monetary policy impacts
the stock market boom-bust through sticky wages and inflation targeting (Christiano et al, 2007), known as the
effect of monetary policy on the stock market via human capital-driven growth. These arguments and findings

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 Relationship between Covid-19 pandemic and firm’s performance towards unemployment across countries

were supported by Parantap, Max & Joseph (2009) where Tobin‘s Q with physical adjustment cost is applied to
understand the long-run relationship between inflation, Q and human capital utilization.
Furthermore, based on a pervasive empirical finding from the US economy, inflation is negatively correlated
with the normalized market price of capital (Tobin‘s Q) and growth. A dynamic stochastic general equilibrium
model of endogenous growth is developed to explain these stylized facts. In this model, human capital is the
principal driver of self-sustained growth. Long run comparative statics analysis suggests that inflation diverts
scarce time resource to leisure which lowers human capital utilization. This impacts growth adversely and
modulates capital adjustment cost downward resulting in a decline in Tobin‘s Q. For the short run, a Tobins‘Q
effect of inflation on growth weakens the negative association between inflation and Q (Parantap, Max & Joseph,
2009).
Next, Chinedu Francis Egbunike (2018) studied the relationship between macroeconomic factors, firm
characteristics and financial performance and reported that there is no significant effect for interest rate and
exchange rate, but a significant effect for inflation rate and GDP growth rate on return on assets. Besides, the firm
characteristics showed that firm size, leverage and liquidity were significant. A similar finding reported by
Tanaka, et. al (2020) reveals three main findings. Firstly, firms‘ GDP forecasts are associated with their
employment, investment, and output growth in the subsequent year. Secondly, over-optimistic and pessimistic
forecast errors predict lower profitability and productivity, which is consistent with the model of input choice
under uncertainty. Thirdly, the larger and more cyclical firms make forecasts that are closer to professionals,
presumably reflecting their higher return to accuracy. Therefore, these results postulated that the impact of the
macroeconomic factors towards business performance especially on the firm‘s value is important to consider in
investigating the relationship of the unemployment rate in the country.
In Vietnam, the impact of the Covid-19 lockdown on stock market performance was found to have an adverse
impact on the daily increasing number of Covid-19 cases on stock returns whereby the financial sector was hit the
hardest, on the Vietnam stock market during the Covid-19 outbreak [14]. In China, transportation, mining,
electricity and heating, and environment industries have been adversely affected by the pandemic. However,
manufacturing, information technology, education and health-care industries have been resilient to the pandemic
[13].
In the United States, the Covid-19 outbreak showed a big impact on energy prices and stock market
performance besides weakening in crude oil price. They concluded that the Covid-19 has a significant impact on
the global economy since their study covers crude oil price and three US stock indexes: DJI, S&P 500, and
NASDAQ Composite [15].
Further analysis of the US economy revealed that changes in share prices exposed how different industries are
affected by Covid-19 on real-time/daily basis. Stock market data does have a few limitations, however, when it
comes to measuring the impact of the crisis [16]. Notably, it does not include small firms, firms that are not
publicly listed, the third sector or the public sector, which might be affected quite differently. For example, many
public sector services have seen an increase in demand. In addition, many of these firms operate internationally, so
changes in their share prices will represent the effects not only on the UK economy but also in other markets that
they operate in.
The spread of Covid-19, and international measures to contain it, are having a major impact on economic
activity in the UK. In this observation, how this impact has varied across industries is described using data on
share prices of firms listed on the London Stock Exchange. Also described is, how well-targeted government
support for workers and companies is, in light of this. This follows [17] who described the impact on the US and
China by looking at changes in share prices. The industries that have been hit the hardest include tourism and
leisure (which includes air travel), fossil fuels production and distribution, insurance, retailers (excluding food and
drug retailers) and some large manufacturing industries. At the other end of the spectrum, some industries have
outperformed the market, including food and drug manufacturers and retailers, utilities, high tech manufacturing
and tobacco. Unsurprisingly, firms in medical and biotech research have also outperformed the market (falling by
16% relative to the overall fall of 35%). Instead, big changes in share prices occurred from the end of February, in
the days following Italy‘s introduction of a lockdown in Lombardy, with very little change in prices in the period
before. The exceptions to this are the gas and water, automotive and parts, and fossil fuel production sectors,
where changes in share prices took place steadily over the three-month period, possibly driven by other factors.
The tourism and leisure (excluding air travel) sector stands out as being one of the hardest-hit industries (in
terms of seeing a large reduction in relative share price) and having a relatively high share of protection. As the
shutdown continues, more capital-intensive firms that are not able to substantially reduce their costs may start to
struggle more; this may lead to pressure for further government support. There are likely to be long-run costs to
the economy if these firms were forced to shut down and the skills and experience of their workers were lost [17].

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These series of studies that focus on stock prices highlighted that the market value of the equity reported
dynamic performance that affected the firm‘s value and capital structure of the companies. Even though some of
the business sectors are still outperformed, however, most of the companies are affected by this Covid-19
pandemic that affected the economic factors in the country which offer no new job and perform retrenchment
program on employees. According to Daskalakis, Balios & Dalla (2017), the global financial crisis has triggered
capital structure dynamic determination regarding how ―quickly‖ companies tend to adjust their capital structure
to their long-term targets, in different macroeconomic states. They also found clear differentiations of the effects
and the contribution of the firm-specific and the macroeconomic variables between short-term debt and long-term
debt ratios, when macroeconomic states change.
In the perspectives of the private sector, Mokhova & Zinecker (2014) indicated the influence of
macroeconomic factors on corporate capital structure in different European countries. The global financial crisis
and the European debt crisis show the significance of the country financial stability, the efficiency of fiscal and
monetary policies, and their impact on the private sector. Besides, the macroeconomic policies of a country
affect the financial performances of the companies and their future sustainable development and growth. They
also put stress on the human capital initiates by managers who make their financial decisions according to the
source of financing and capital structure based on the company‘s advantages and disadvantages, i.e. its internal
characteristics, and doubtless on the macroeconomic conditions and country specifics, i.e. external factors. The
findings show the significance of macroeconomic factors in the decision-making process regarding capital
structure and the source of financing.
In relation to the firms‘ performance and economic factors, (Bastos, Nakamura & Basso, 2009; Bokpin, 2009;
Dincergok & Yalciner, 2011; Camara, 2012) found that there is a negative and significant relationship between
corporate capital structure and GDP (as well as GDP growth). The boost in economy and consequently
growth in GDP lead to an increase in companies‘ profits. According to pecking order theory, companies will
prefer internal sources as retained earnings then debt. Other than GDP, the next economic factor needed to be
considered is the inflation rate. With respect to this proxy, there are mixed results reported. For instance, inflation
has a strong and positive influence on the capital structure (Hanousek & Shamshur, 2011); inflation does not
influence the capital structure (Bastos, Nakamura & Basso, 2009); inflation haz relationship with market leverage,
but no effect on the book leverage (Frank & Goyal, 2009). Camara (2012) showed that macroeconomic
conditions including inflation rate have a significant relationship with capital structure.
In addition, some authors have investigated the influence of different macroeconomic indexes on the corporate
capital structure. For instance, Duan, Chik bin. & Liu (2012) found out that the product market index, legal system
index, non-state economic structure index and financial market index are negatively correlated with debt ratio.
Moreover, the companies choose short-term loans, if the degree of government intervention is stronger, the
efficiency of the product market is higher, and the legal system is robust. And the preferred source of financing is
long-term loans if the proportion of the non-state economy is greater and the development of financial sector is
higher.
Also focused on capital structure, Kottaridi & Siourounis (2007) witnessed a significant change in the structure
of capital flows to developed as well as developing countries. They provided empirical evidence that a bad
liquidity shock increases, investors switch to safer assets but with a pecking order: they seem to damp equities for
more bonds and more direct investments. Sadiq, et. al (2020) also claimed that debt in capital structure and firms'
performance has a great novelty in reducing market imperfections that improve firms' values. Besides, they
confirmed a U-shaped relationship between debt and Tobin's Q in mediation with the country's per capita
income. Pervaiz Ahmed Memon et al. (2015) applied pooled OLS and fixed effect regression as estimation
techniques and found out that profitability, tangibility, and size of the firm appear to significantly affect debt level
across different proxies and different estimation techniques. Interest rate and inflation are significant determinants
of debt in fixed effect estimation. Previous study also confirmed the existence of firm specific influence on firm
performance.
Based on business globalization and the fierce competition for market share among the companies, it is
fundamental for a firm to maintain a high firm performance (Ruhomaun, Saeedi & Nagavhi (2019). They
highlighted that firm performance is considered as an important indicator for investors while making investment
decisions since it reflects a firm‘s overall financial health. Hence, firm performance is influenced by economic
factors, macro and microeconomic variables such as exchange rate, interest rate, financial distress and derivatives
usage. The study reveals that both interest rate and financial distress have a negative and significant effect on firm
performance.
Based on the sample size across countries, Sahin (2018) studied the non-financial companies within the fragile
five countries (Turkey, Brazil, South Africa, India and Indonesia) during the period of 2004-2013. The factors
affecting capital structure were assessed along with micro and macro variables for these countries. The micro

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variables (firm specific) included in the model were the debt taken in the previous year, firm size, growth, industry
debt average, and the tangibility and profitability ratio; GDP growth, inflation and exchange rate change were
included in the model as macroeconomic variables. A statistically significant relationship was discovered between
the GDP growth rate and the debt ratio only for Turkey for the full period (2004-2013) and for India for the period
between 2006 and 2013. On the other hand, a positive relationship was found between the inflation rate and the
debt ratio for the general (2004-2013) and post-crisis models. In addition to that, results reported a negative
relationship between price to book value and leverage ratio for Turkey and South Africa. However, a positive and
statistically significant relationship between expected inflation rate and leverage ratio was found for the model
with all countries.
The financing decision of a firm is influenced by both internal (firm specific) and external (macroeconomic)
factors. However, the impact of macroeconomic variables on capital structure decisions focused on firm value
might be affected by the unemployment rate and is somewhat under-researched particularly in the context of
developing countries (Rehman, 2016). However, there are other external determinants of a corporate capital
structure which has been studied, e.g; public debt, ban credit, unemployment rate, Tobins‘ Q, ROA, firm value,
capital structure and etc. (Korajczyk & Levy, 2003; Bastos, Nakamura & Basso, 2009; Bokpin, 2009; Sett &
Sarkhel, 2010; Duan, Chik & Liu, 2012; Camara, 2012, Jinji, Zhang & Haruna, 2019; Sadiq,et. al., 2020;
Tanaka, et. al, 2020; Yang & Gan, 2021.
The latest study on the Covid-19 vaccine done by Shrotri, Swinnen, Kampmann & Parker (2021) hopefully can
treat and eliminate the pandemic for spreading and recovery processes by mitigating the issue in increasing
unemployment rate at the global level. Here, non-pharmaceutical interventions have been the mainstay of
epidemic control to date, vaccination is likely to constitute the definitive, long-term defence strategy against
SARS-CoV-2 morbidity, mortality, and transmission, offering the best hope of a return to normal life.
[Link] and Methodology
Secondary data are utilized for; unemployment rate as a dependent variable and the number of confirmed cases
of Covid-19 and firms‘ performance as a proxy by firm value as an independent variable and macroeconomics
factors like GDP growth, inflation rate and interest rate as controlling variables. The study period started from
January 15, 2020, up to January 15, 2021, limited only to the Covid-19 pandemic spread issue. The data were
gathered from Bloomberg for all listed companies in seven countries under five main sectors (Consumer
Discretionary, energy, industrial, information technology and real estate) for data availability since most of the
listed firms still do not published the current data in year 2020 (see Table 1). Therefore, the unbalanced panel data
are reported. With regards to the Covid-19, the data were obtained from Worldometers website.
Table 1: Sample Size of the Study
F
Country req % Cum.
Hong 2
Kong 03 10.42 10.42
1
Japan 358 69.68 80.09
2
Malaysia 38 12.21 92.3
Philippin
es 5 0.26 92.56
Singapor 1
e 29 6.62 99.18
1
Thailand 3 0.67 99.85
Vietnam 3 0.15 100
Next, the multiple regression for such relationship is represented by model equation, ordinary least square
(OLS) as follows:
UEmployit= α+ COVID-19it +FV+ECO+ εit..… OLS (1)

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where UEmploy stands for the unemployment rate, the time period is denoted by the subscript t (t = 1 year,
2020 which refers to the year Covid-19 emerged); sectors are denoted by the subscript i (I = 1….5,N = 1…7
countries, 1…1949 companies); Covid-19 refers to the number of confirmed cases; FV refers to the firms‘
performance as proxy by firm value; ECO represents macroeconomic factors which consisted of GDP growth,
inflation rate and interest rate; α represents intercept error term.
[Link] and Discussion
The study considered seven countries with 1949 listed companies traded in each country with the total number
of confirmed covid-19 cases respectively as shown in figure 2. The highest number of Covid-19 is from
Philippines and the lowest is Hong Kong based on study period. From these statistics we can see that is there any
relationship between this number of Covid-19 cases with the unemployment rate as shown in figure 3. By
comparing direct approach using these bar graph, the Philippines also shown at the highest unemployment rate
with 10.43 percent. Thus, it was significant for this study to further research and validate the dataset by using
statistical approach, OLS.
The data are normal distributed as reported by skewness and kurtosis statistics whereby the data are in between
+/- 3.0. These results are supported by the pairwise correlation as shown in table 3, there are no multicollinearity
issue among the variables reported by the F value is less than 0.7. With respect to the mean, minimum and
maximum value for all the proxies (see table 2), the mean for the unemployment across country is 3.31 percent
shows quite far different with the highest record at 10.43 percent for year 2020 whereas at minimum of 2 percent.
As for firms‘ performance, mean value shows at 1.09 percent with minimum and maximum at 0.09 and 11.72
respectively. This implies that some of the companies in the country are still performed better even though during
Covid-19 pandemic. With regards to the macroeconomic performance, the conditions are not stable for year 2020
as postulated by mean value of negative GDP growth and inflation rate as well as very low interest rate which
can‘t help to boost the economy at global.

Figure 2: The Number of Covid-19 Cases among 7 Countries; where 1= Hong Kong; 2= Japan; 3= Malaysia;
4= Philippines; 5= Singapore; 6= Thailand; 7 = Vietnam.

Figure 3: The Unemployment Rate across Countries

Table 2: Descriptive Statistics and Normality Tests Results

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 Relationship between Covid-19 pandemic and firm’s performance towards unemployment across countries

Variable Obs Mean Std Dev Min Max Skewness Kurtosis

Country 1,949 2.26 0.96 1 7 0.00 0.00
Sector 1,949 2.81 1.32 1 5 0.02 0.00
Unemploy 1,949 3.31 1.02 2 10.43 0.00 0.00
Firm Value 1,949 1.09 0.86 0.09 11.72 0.00 0.00
Covid 1,949 320,768 145,395 2091 541,560 0.00 0.34
GDP 1,949 -5.48 0.49 -9.5 2.91 0.00 0.00
Inflation 1,949 -0.11 0.44 1.14 3.18 0.01 0.00
Interest Rate 1,949 0.29 0.61 -0.03 4 0.00 0.00

Table 3: Pairwise Correlation Results

Variable Country Sector Unemploy FV Covid GDP Inflation Interest
Country 1.00
Sector 0.06 1.00
Unemploy -0.16 0.03 1.00
Firm Value 0.05 0.02 0.07 1.00
Covid 0.27 0.05 -0.69 0.07 1.00
GDP -0.03 -0.01 -0.66 0.05 0.48 1.00
Inflation -0.39 -0.08 -0.08 0.05 0.05 0.21 1.00
Interest 0.39 0.08 0.65 -0.08 -0.47 -0.29 -0.63 1.00

Next, based on the results presented in Table 4, unbalanced panel data were applied for the tests indicate an
unequal number of observations, N which covered the pooled ordinary least square (OLS) model. R-square is
reported for the model estimation of regression in order to investigate the percentage of relationship from the
number of Covid-19 cases and firm value as explanatory variation in explaining the level of unemployment rate
controlled by macroeconomics factors in each country. The R-square and adjusted R-square results also revealed a
very satisfactory and strongly acceptable value for almost 87.5 percent. This implies that unemployment rate has
about 87.5 percent affected by the Covid-19 cases since the p value has shown a significant at 99 percent
confident level at significant controlling variables to all. However, the performance of companies shows
insignificant result as similar as industry sector since this pandemic spread worldwide.
Table 4: Multivariate Regression Results
Variable Coeff t P
Intercept -2.386 -19.25 0.000
Sector -0.002 -0.39 0.696
Firm Value 0.005 0.48 0.633
Covid -0.000 -8.85 0.000
GDP -1.033 -52.54 0.000
Inflation 1.237 63.89 0.000
Interest 1.354 63.89 0.000
R Sq. 87.46%
Adj. R Sq. 87.42%
F-Value 294.169***

[Link] And Conclusion

Covid-19 vaccine recently discover hopefully can treat and eliminate the pandemic for spreading and recovery
processes by mitigating the issue in increasing unemployment rate at the global level. The finding of this study
concludes that Covid-19 have a relationship towards unemployment in seven countries especially Philippines
followed by Hong Kong and Malaysia. Since this study also consider firm value as a firms‘ performance proxy,
therefore the study provides a practical outcome to a government and stock market player in across countries as
well as stakeholders particularly for the future strategize planning while facing any pandemic event that most
probably will happen again and again. Besides, the findings benefited stakeholders who will be able to provide
justifications, by considering the risk and opportunities (possible gain in abnormal returns) in the trading market,
and who will be able to forecast the movement of share price by identifying its significant reaction to certain
sectors, and who will be able to make recommendations and provide inputs to government on risks and
opportunities in business performance. Thus, this study can provide a reference to stakeholders on the significant
association between unemployment rate and COVID-19 pandemic spreads and firms‘ performance by considering
the different macroeconomics factors states.

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AUTHORS PROFILE

Dr. Noriza Mohd Saad

She is an Assoc. Prof in Business & Management at Universiti Teknologi MARA Cawangan Kelantan,
Machang. She obtained her Bachelor of Finance (Hons) from Universiti Teknologi MARA in 2001, MBA
from Universiti Utara Malaysia in 2002 and graduated from Universiti Teknologi MARA in 2017 with a
Ph.D in Accountancy. Her areas of research are Islamic capital market, corporate governance, capital
structure, business financial performance, tariff optimization and sukuk market.

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