The impact of COVID-19 on company performance per industry sector: Evidence from South Africa

Abstract

Orientation: Governments across the world have adopted a variety of preventative measures to curb the spread of the coronavirus disease 2019 (COVID-19). The full socioeconomic costs present a significant threat to economic growth, with developing economies such as South Africa predicted to be the worst affected.

Research purpose: This study assessed the impact of COVID-19 on company performance based on the various industry sectors of the Johannesburg Securities Exchange (JSE) of South Africa.

Motivation for the study: The study builds on the growing body of knowledge on the impact of COVID-19 on company performance in a South African context.

Research approach and method: All JSE-listed companies were analysed for the period 2014–2020. Descriptive statistics and regression analyses were applied to assess the impact of COVID-19 on company performance per industry sector and to identify the mechanisms through which company performance was affected during the pandemic year.

Main findings: Company performance per JSE industry sector suffered a significant negative impact during the 2020 pandemic year. Sectors were affected differently owing to the idiosyncratic nature of each industry. Cash-flow-related variables significantly affected company performance during the pandemic year.

Practical implications: A healthy cash flow is paramount in times of crisis. Investors and other stakeholders should be cognisant of how industry sector idiosyncrasies affect company performance during crises.

Contribution: Results may provide insights into the effect of COVID-19 on company performance per industry sector in South Africa, to support the mitigation of the negative consequences of COVID-19 and future crises or pandemics.