The Effect of COVID-19 on Net Investment Expenditure: The Moderating Role of Cash Flexibility

Articles in Press

Document Type : Research Paper

Authors

1 Assistant Professor, Department of Accounting, Faculty of Humanities and Social Sciences, University of Kurdistan, Sanandaj, Iran.

2 Department of Accounting, Faculty of Economics and Social Sciences, Bu-Ali Sina University, Hamadan, Iran

3 Ph.D. Student, Department of Accounting, Faculty of Humanities, Islamic Azad University of Sanandaj, Sanandaj, Iran.

10.22103/jak.2024.23092.4028

Abstract

Objective: This research seeks to investigate the effect of the spread of the COVID-19 pandemic on the net investment expenditure of business units and to explain the moderating role of cash flexibility on this relationship.

Method: To investigate the effect of COVID-19 on net investment expenditure, generalized least squares regression (GLS) and data for 143 firms listed on the Tehran Stock Exchange during 2009-2022 were used, and to investigate the moderating role of cash flexibility on this relationship, first by applying the matching method a matched sample was extracted (84 firms) and then, the difference in differences (DID) approach was implemented on the matched sample data.

Results: The results indicate that the spread of the COVID-19 pandemic has resulted in a decrease in the firms’ net investment expenditure. In addition, the results show that having a high level of cash flexibility in the years before the outbreak of COVID-19 has been able to moderate the effect of this crisis on the firms’ net investment expenditure. Using an alternative definition to measure the net investment expenditure and using the entropy balancing method (EBM) to extract the matched sample, the results of supplementary tests confirm the main findings of the research by

Conclusion: The findings show the negative effect of the COVID-19 crisis on the ability of business units to develop tangible and intangible fixed assets and emphasize the vital role of high cash flexibility in maintaining and developing the operational capacity of companies during the crisis.

Keywords

Main Subjects

Journal of Accounting Knowledge

Articles in Press, Accepted Manuscript
Available Online from 31 July 2024

Files

History

  • Receive Date: 18 March 2024
  • Revise Date: 19 June 2024
  • Accept Date: 31 July 2024

Share

How to cite

Statistics