Analysis of financial management practices in China's manufacturing sector before and during COVID-19: a comparison with Romania

Abstract

PurposeThe objective of this study is to investigate how the coronavirus disease 2019 (COVID-19) pandemic affects firms' financial management in China's manufacturing sector. In addition, the authors analyze the changes in various financial indicators before and during the COVID-19 pandemic. Further, the authors make a cross-country comparison of the COVID-19's impact on financial management between China and Romania.Design/methodology/approachThe study uses the balanced panel data of 2,272 manufacturing listed companies from 2019 to 2020, and applies the t-test method and multiple regression method.FindingsThe results show that firms' financial performance in most manufacturing sub-sectors decreased during the observed period. In addition, the authors find that equity financing, proper liquidity management and an expanded firm scale can improve firms' financial performance. The authors further compare the results with the Romanian results, and find that the negative impact of debt-to-equity ratio on firms' financial performance in Romania is greater than that in China and the positive impact of financial autonomy ratio and working capital ratios is greater in China than that in Romania.Practical implicationsThe findings can help corporate managers make the best financial management decision in response to crisis.Originality/valueThis study is one of the pioneers that analyze how manufacturing companies carried out their financial management during the COVID-19 crisis in the Chinese context, and provides a cross-country analysis of corporate financial management practices in China and Romania.

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“…A Romanian study showed that NWC increases in 2020 compared to 2019 and it positively impacts corporate performance [ 82 ]. Chen and Xu [ 83 ], taking Chinese manufacturing companies as the sample, also found a positive relationship between NWC and ROA. Overall, these results also suggest that the COVID-19 had detrimental consequences for firm governance and performance.…”

“…A Romanian study showed that NWC increases in 2020 compared to 2019 and it positively impacts corporate performance [82]. Chen and Xu [83], taking Chinese manufacturing companies as the sample, also found a positive relationship between NWC and…”

Evaluating private hospital performance before and during COVID-19 in China

“…[11] Therefore, ensuring the financial health and long-term development of private hospitals is beneficial to the stability of China medical system. [12] Some studies have analyze the organizational performance before and during COVID-19 in companies, [13][14][15] banks, [16][17][18] and libraries, [19] and very few studies have focused on the performance of medical institutions. [20,21] For example, Nunes and Ferreira [21] concluded that the efficiency of public hospitals dropped when COVID-19 started, and then recovered to prepandemic levels because of the actions taken by the Portuguese state.…”