How do investment decisions of firms change before and after the covid-19 pandemic? Empirical evidence in Vietnam

Abstract

The study investigates the impact of the COVID-19 pandemic and financial accessibility on investment decisions among 205 companies in Vietnam across various sectors including manufacturing, retail, construction, real estate, and transportation and warehousing, all listed on the Ho Chi Minh City Stock Exchange (HSX). Data spanning from the first quarter of 2018 to the fourth quarter of 2021 from HSX serves as the study's focal point. To mitigate methodological limitations and ensure the precision of regression coefficients, the research author adopts the General Least Squares (GLS) methodology. The findings reveal that the COVID-19 grpandemic has acted as a deterrent to firm investment. Additionally, the study highlights that larger firms tend to invest more compared to their smaller counterparts. However, amidst the COVID-19 epidemic, investment decisions of large firms have dwindled due to substantial losses incurred from fixed costs. Furthermore, the research suggests that companies with greater liquidity flexibility exhibit agility in expanding their investment portfolios during the pandemic, potentially positioning them to better weather external shocks.