System Relevance and Firm Performance Due to COVID-19

Michael Johannes Böhm () and Pamela Qendrai
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Michael Johannes Böhm: TU Dortmund
Pamela Qendrai: IZA

No 16606, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We study the impact of COVID-19 on firm performance. Using financial accounts of a large number of German firms, we document that industry affiliation is an important economic dimension of the crisis. Motivated by this fact, we analyze an important industry-specific regulation, system relevance, which allows businesses to remain open in times of lockdown and other restrictions. A difference-in-differences estimation strategy shows that relative revenues of system-relevant firms increase by 6-9 percent and profits by 17-25 percent due to COVID. Controlling for channels that are arguably not driven by the system-relevance regulation, the impact on revenues decreases but remains significant. Overall, results indicate that regulations affecting the ability to operate as well as industry-level shocks play important roles for firm performance during a pandemic-induced crisis.

Keywords: system relevance; industry shocks; firm performance; COVID-19 (search for similar items in EconPapers)
JEL-codes: H12 L25 (search for similar items in EconPapers)
Pages: 72 pages
Date: 2023-11
New Economics Papers: this item is included in nep-eff and nep-ent
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Published - published in: German Economic Review , 2023, 24 (4), 349-410

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