Zombies or Still Alive. Who Took Advantage of COVID-19 State Aid?

Tomasz Wiśniewski, Adam Adamczyk, Sławomir Franek

Abstract


Theoretical background: The SARS-CoV-2 pandemic has caused violent reactions from the governments of almost all countries in the world. The attempt to contain a pandemic by restricting the mobility of society has had a huge impact on people and some businesses. As a result of COVID-19 restrictions, it became necessary to introduce special state aid programs for those businesses that were most affected by these restrictions. This was also the case in Poland. We based our analysis on welfare economics (Harberger, 1971), in which government support for enterprises is legitimized when their situation would have been worse without these interventions.

Purpose of the article: The aim of this article is to assess the impact of public aid granted to large companies in Poland on their financial condition. The research problem is to answer the question whether the companies that received the aid needed it. In assessing the appropriateness of aid, liquidity, debt level and profitability indices were used, which directly resulted from the objectives of COVID-19 aid granted in Poland. The added value of the study is combining the analysis of data from financial statements with information on state aid published by the Office of Competition and Consumer Protection (UOKiK).

Research methods: The research sample consisted of 1,201 large Polish enterprises from the non-financial sector. The study used non-parametric statistical tests and quartile analysis.

Main findings: The results show that the aid went to entities that were already in a worse financial situation before the pandemic. At the same time, it was demonstrated that the aid did not distort the market mechanism, i.e. it neither excessively improved the situation of supported entities nor significantly worsened the situation of entities that did not benefit from the aid.

Keywords


public aid; COVID-19; financial performance

Full Text:

PDF

References


Act of 2 March 2021 on specific solutions related to preventing, counteracting, and combating COVID-19, other infectious diseases and crisis situations caused by them (Journal of Laws of 2021, item 2095).

Baek, S., Mohanty, S.K., & Glambosky, M. (2020). COVID-19 and stock market volatility: An industry level analysis. Finance Research Letters, 37, 101748. doi:10.1016/j.frl.2020.101748

Baldwin, R., & Weder di Mauro, B. (2020). Economics in the time of COVID-19. CEPR Press. Retrieved from https://voxeu.org/content/economics-time-covid-19

Barrero, J.M., Bloom, N., & Davis, S.J. (2020). Covid-19 is also a reallocation shock. NBER, w27137. doi:10.3386/w27137

Bennedsen, M., larsen, B., Schmutte, I., & Scur, D. (2020). Preserving job matches during the COVID-19 pandemic: Firm-level evidence on the role of government aid. GLO Discussion Paper, 588. Global Labor Organization (GlO). Occasional Paper. Centre for Economic Performance No. 51. doi:10.13140/RG.2.2.15337.11366

Bighelli, T., lalinsky, T., & Vanhala, J. (2022). COVID-19 Pandemic, state aid and fim productivity. Bank of Finland Research Discussion Paper, 1. doi:10.2139/ssrn.4009439

Bloom, N., Bunn, P., Chen, S., Minzen, P., & Smietanka, P. (2020). The economic impact of coronavirus on UK businesses: Early evidence from the Decision Maker Panel. VOX CEPR Policy Portal.

Buchheim, l., Dovern, J., Krolage, C., & Link, S. (2020). Firm-level expectations and behavior in response to the Covid-19 crisis. CESifo Working Paper, 8304, doi:10.2139/ssrn.3603773

Campello, M., Graham, J.R., & Harvey, C.R. (2010). The real effects of financial constraints: Evidence from a fiancial crisis. Journal of Financial Economics, 97, 470–487. doi:10.1016/j.jfieco.2010.02.009

Cros, M., Epaulard, A., & Martin, P. (2021). Will Schumpeter catch COVID-19? Evidence from France. VOX CEPR Policy Portal.

Drăgoi, A. (2020). Supporting the EU economy through state aid during COVID-19 crisis. A comparative approach. Global Economic Observer, 8(1), 11–18. Retrieved from https://EconPapers.repec.org/RePEc:ntu:ntugeo:vol8-iss1-2-11

Dvouletý, O., Srhoj, S., & Pantea, S. (2021). Public SME grants and firm performance in European Union: A systematic review of empirical evidence. Small Business Economics, 57(1), 243–263. doi:10.1007/s11187-019-00306-x

Fumagalli, Ch., Motta, M., & Peitz, M. (2020). Which role for state aid and merger control during and after the Covid crisis? Journal of European Competition Law & Practice, 11(5–6), 294–301. doi:10.1093/jeclap/lpaa036

Golubeva, O. (2021). Firms’ performance during the COVID-19 outbreak: International evidence from 13 countries. Corporate governance: The International Journal of Business in Society, 21(6), 1011–1027. doi:10.1108/CG-09-2020-0405

Gourinchas, P.O., Kalemli-Ozcan, Ṣ., Penciakova, V., & Sander, N. (2020). Covid-19 and SME failures. NBER Working Paper, w27877. doi:10.3386/w27877

Groenewegen, J., Hardeman, S.,& Stam, E. (2021). Does COVID-19 state aid reach the right firms? COVID-19 state aid, turnover expectations, uncertainty and management practices. Journal of Business Venturing Insights, 16, e00262. doi:10.1016/j.jbvi.2021.e00262

Guerrieri, V., lorenzoni, G., Straub, l., & Werning, I. (2020). Macroeconomic implications of COVID-19: Can negative supply shocks cause demand shortages? American Economic Review, 112(5), 1437–1474. doi:10.1257/aer.20201063

Harberger, A.C. (1971). Three basic postulates for applied welfare economics: An interpretive essay. Journal of Economic Literature, 9(3), 785–797. Retrieved from https://www.jstor.org/stable/2720975

Hu, S., & Zhang, Y. (2021). COVID-19 pandemic and firm performance: Cross-country evidence. International Review of Economics & Finance, 74, 365–372. doi:10.1016/j.iref.2021.03.016

Ichev, R., & Marinic, M. (2018). Stock prices and geographic proximity of information: Evidence from the Ebola outbreak. International Review of Financial Analysis, 56, 153–166. doi:10.1016/j.irfa.2017.12.004

Ivashina, V., & Scharfstein, D. (2010). Bank lending during the fiancial crisis of 2008. Journal of Financial Economics, 97(3), 319–338. doi:10.1016/j.jfieco.2009.12.001

Just, M., & Echaust, K. (2020). Stock market returns, volatility, correlation and liquidity during the COVID-19 crisis: Evidence from the Markov switching approach. Finance Research Letters, 37, 101775. doi:10.1016/j.frl.2020.101775

Levy, D.l. (2020). COVID-19 and global governance. Journal of Management Studies, 58(2), 562–566. doi:10.1111/joms.12654

Manteu, C., Monteiro, N., & Sequeira, A. (2020). The short-term impact of the COVID-19 pandemic on Portuguese companies. Occasional Paper, 03. Banco de Portugal. Retrieved from https://www.bportugal.pt/en/paper/short-term-impact-covid-19-pandemic-portuguese-companies

Motta, M., & Peitz, M. (2020). State aid policies in response to the COVID-19 shock: Observations and guiding principles. Intereconomics, 55(4), 219–222. doi:10.1007/s10272-020-0902-4

Narayan, P.K., & Phan, D.H.B. (2020). Country responses and the reaction of the stock market to COVID-19 – a preliminary exposition. Emerging Markets Finance and Trade, 56(10), 2138–2150. doi:10.1080/1540496x.2020.1784719

Narayan, P.K., Phan, D.H.B., & Liu, G. (2020). COVID-19 lockdowns, stimulus packages, travel bans, and stock returns. Finance Research Letters, 38, 101732. doi:10.1016/j.frl.2020.101732

PFR. (2020). Regulamin ubiegania się o udział w programie rządowym Tarcza Finansowa Polskiego Funduszu Rozwoju dla dużych firm. Warszawa.

Santarelli, E., & Vivarelli, M. (2002). Is subsidizing entry an optimal policy? Industrial and Corporate Change, 11(1), 39–52. doi:10.1093/icc/11.1.39

Shen, H., Fu, M., Pan, H., Yu, Z., & Chen, Y. (2020). The impact of the COVID-19 pandemic on firm performance. Emerging Markets Finance and Trade, 56(10), 2213–2230. doi:10.1080/1540496x.2020.1785863

TFEU. (2012). Official Journal C 326, 26.10.2012. Retrieved from http://data.europa.eu/eli/treaty/tfeu_2012/oj

UOKiK. (2021). Raport o pomocy publicznej w Polsce udzielonej przedsiębiorcom w 2020 roku. Warszawa, grudzień 2021. Retrieved from https://uokik.gov.pl/raporty_i_analizy2.php




DOI: http://dx.doi.org/10.17951/h.2022.56.2.149-163
Date of publication: 2022-11-04 08:09:08
Date of submission: 2022-06-20 17:46:02


Statistics


Total abstract view - 726
Downloads (from 2020-06-17) - PDF - 0

Indicators



Refbacks

  • There are currently no refbacks.


Copyright (c) 2022 Tomasz Wiśniewski, Adam Adamczyk, Sławomir Franek

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.