Debt Structure and Corporate Performance During the Covid-19 Crisis

Abstract: This paper examines the effects of public and bank debt financing on firm performance in emerging markets. Using data on 742 publicly traded firms from the BRIC countries, it is documented that bank debt may have a positive effect on operating performance of a firm. This effect is more pronounced for financially distressed firms and during the crisis period. It is also found that bank debt has a U-shaped relationship with firm’s market valuation. We support the theory of financial flexibility and renegotiation efficiency of bank debt.