Exploring the Impact of the COVID-19 Pandemic on Firms' Financial Performance and Cash Holding: New Evidence from China's Agri-food Sector

The objective of this paper is to investigate the impact of coronavirus disease 2019 (COVID-19) on the financial performance and cash holdings of Chinese agri-food companies. We also examine whether or not company ownership, the affected areas, and leverage level affect this relationship. The empirical results show that the COVID-19 outbreak has had no significant impact on financial performance and the cash-holding level of agri-food companies. In addition, the financial performance of state-owned companies is enhanced during such a crisis, whereas COVID-19 reduced the financial performance and cash-holding level of privately owned companies. In middle- and high-risk areas, the pandemic has had a negative impact on financial performance, while it has had a positive impact on financial performance in low-risk areas. The negative impact of COVID-19 on cash holding is greater in highly leveraged companies than it has been in low-leveraged companies. This paper may provide some new insights for managers to ensure smooth operation and improve firms' performance in order to overcome this crisis.