The impact of being public on firm performance during COVID-19: A quasi-experimental study for Turkiye

COVID-19, being an unprecedented shock in our recent history, was beyond a virus that affected all aspects of life including economics, commerce and trade and in particular dynamics of the managerial operations of firms in the real sector of the economy. In this study, impact of being public on firm performance has been analyzed, during the Pandemic period in Turkiye. Firm performance is measured under 4 main categories: liquidity, profitability, leverage, and efficiency. In order to analyze impact of a being public firm, propensity score matching (PSM) method with Probit specification is utilized to construct sample of a matching group among the firms that are not publicly listed (private firms). Afterwards, difference-in-differences (DID) regressions are employed to analyze the net causal impact on different measures of performance, to see the relative performance of the publicly listed firms. It has been found that (i), public firms' net liquidity position was better with regard to matched private firms during covid-19 and this impact is observed to be greater for SMEs and non-manufacturing firms. (ii) From the profitability perspective, although the impact was not significant in terms of return on assets, it was strongly positive for the net profit margin. (iii) Being public has a negative net effect on financial leverage of firms in comparison to the private firms during the pandemic. (iv) Regarding the efficiency, it is revealed that public firms performed better than matched private firms amidst the pandemic period. (v) As a result of this study, evidence was found that being a public firm has a strong and positive net impact on the overall financial performance of SMEs during the COVID-19 period and this impact was not significant for large firms. Thus, this study revealed that public firms' performances are significantly better than the matched non-listed firms amidst the pandemic years. The important finding of this study for policymakers is that encouraging SMEs to go public will make the companies' performance, and therefore the economy, more resilient to shocks such as COVID-19. Keywords: Applied Econometrics, COVID-19, Quasi-Experimental Design, Corporate Finance