This study investigates the determinants of the financial performance of listed non-financial firms in Sri Lanka, particularly during and after the COVID-19 pandemic. Utilizing a dataset of 595 firm-year observations of listed non-financial firms on the Colombo Stock Exchange, covering 2020 to 2023, key determinants include liquidity management (current ratio), capital structure (debt/equity), the impact of COVID-19, and firm size (total assets), with financial performance measured by return on assets (ROA). The findings reveal a significant positive relationship between liquidity management and return on assets (ROA), as well as between firm size and ROA. In contrast, COVID-19 has a notable negative impact on ROA, while capital structure shows no significant association across the whole sample. Interestingly, liquidity management has a significant and positive link with the financial performance during and post-COVID. Further, the link between liquidity management and return on assets (ROA) is stronger in the post-COVID period. The research highlights the importance of liquidity management in enhancing financial performance during global crises, such as COVID-19. It emphasizes that top management should prioritize corporate financial policies to ensure optimal liquidity. The findings have practical implications for stakeholders, especially regulators, standard setters, firms, auditors, and academics on internal and external standards and policies development on liquidity management because it has a significant positive impact in both crisis and non-crisis periods. This study offers the first empirical insights into the determinants of financial performance within the unique context of the pandemic and post-pandemic.
Kokilan et al. (Fri,) studied this question.