The COVID-19 Shock and Corporate Financial Performance: Panel Evidence from Firms Listed on the Casablanca Stock Exchange (2018–2023)

Abstract

This study investigates whether, and to what extent, the COVID-19 pandemic disrupted the financial performance of publicly listed non-financial and financial firms in Morocco, and whether any disruption proved transitory or persistent. Using a balanced panel of 76 firms listed on the Casablanca Stock Exchange observed over six fiscal years (2018–2023, 456 firm-year observations), the paper combines a theoretical framework grounded in the Resource-Based View, dynamic capabilities theory, and capital structure theory with an empirical strategy that partitions the sample into a pre-pandemic period (2018–2019), a pandemic-shock period (2020), and a post-pandemic recovery period (2021–2023). Paired-sample comparisons and firm-fixed-effects panel regressions show that Return on Assets (ROA) fell by approximately 1.1 to 1.2 percentage points during 2020 relative to the pre-pandemic baseline (p < 0.05), while Return on Equity (ROE) exhibited a similar but noisier pattern. Profitability in the post-pandemic years is statistically indistinguishable from the pre-pandemic baseline, consistent with a V-shaped, transitory shock rather than permanent scarring. Firm size, proxied by the logarithm of revenue, is positively and significantly associated with profitability throughout, lending support to a resource-based resilience argument. The paper proposes a testable conceptual model and four hypotheses that can guide future extensions of this research, including the introduction of leverage, liquidity, and ESG/social-and-environmental performance indicators once such data become available.