A Global Analysis of the COVID-19 Pandemic and Capital Structure in the Consumer Goods Sector

Dwi Risma Deviyanti, Herry Ramadhani, Yoremia Lestari Ginting, Yunita Fitria, Yanzil Azizil Yudaruddin and Rizky Yudaruddin ()
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Dwi Risma Deviyanti: Department of Accounting, Mulawarman University, Samarinda 75123, Indonesia
Herry Ramadhani: Department of Management, Mulawarman University, Samarinda 75123, Indonesia
Yoremia Lestari Ginting: Department of Accounting, Mulawarman University, Samarinda 75123, Indonesia
Yunita Fitria: Department of Accounting, Mulawarman University, Samarinda 75123, Indonesia
Yanzil Azizil Yudaruddin: Department of Accounting, Balikpapan University, Balikpapan 76114, Indonesia
Rizky Yudaruddin: Department of Management, Mulawarman University, Samarinda 75123, Indonesia

JRFM, 2023, vol. 16, issue 11, 1-19

Abstract: Understanding a company’s capital structure is essential for optimizing financial resources amid the challenges posed by the COVID-19 pandemic. This research examines how the pandemic affected the capital structures of global consumer goods companies across industries, market types, and regions. In this study, a fixed effects model was employed to analyze panel-data regression data spanning from 2018 to 2022, encompassing 1491 companies across 80 countries. The results revealed a significant and positive impact of COVID-19 on capital structure in the initial two years, contrasting with a negative trend in the third year, notably in the short-term debt to total assets ratio. The pandemic’s influence on the capital structure varied across sectors, markets, and regions, starting with a consistent positive impact before shifting to a negative and significant effect. The study provides valuable insights for businesses, policymakers, and researchers grappling with the financial implications of external shocks like the pandemic. It underscores the importance of prudent financial decision-making, leveraging the opportunities stemming from a conservative debt approach, and the growing reliance on short-term debt while staying adaptable in response to evolving market dynamics and economic changes.

Keywords: COVID-19; capital structure; consumer goods sector (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2023
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