Was the Swedish way the right way? A Comparative Study of Financial Performance in Italian and Swedish Firms During the Covid-19 Pandemic.

Abstract

This thesis investigates the impact the Covid-19 pandemic had on financial performance of listed firms in Italy and Sweden. Through applying a quantitative approach and using a Difference-in-Differences regression model, stock return was analysed as the dependent variable for financial performance. The final sample included 249 firms, 90 Italian and 159 Swedish. The results reveal that while firms in both countries experienced negative effects, Swedish firms were significantly less negatively impacted during the pandemic. The difference in performance is argued to be due to the different approaches from the governments. While Italy applied a strict strategy with lockdowns, Sweden applied a more voluntary strategy based on recommendations and general guidelines. In addition, the results find a significant negative relationship regarding a firm’s debt-to-equity ratio and financial performance, which can draw connections to the trade-off theory. The findings also highlight specific industries that performed more successfully than others, such as medical equipment and services or software and computer services. The study has been conducted within the theoretical framework of the efficient market hypothesis and mostly aligns with the semi-strong efficiency form. The study aims to provide useful insights for future crises, intended for policymakers, investors and business leaders.