A Causal Relationship Model of the Financial Performance Affecting the Return on Equity of Listed Companies on the Stock Exchange of Thailand during COVID-19 Pandemic

Abstract

This research aimed to explore a causal relationship model of the financial performance affecting return on equity of listed companies on the
Stock Exchange of Thailand during COVID-19 pandemic. The financial performance was used as a measure of how well the company used its
assets and generate revenues as well as its overall financial health over a given period. In this study, the measures of financial performance
included financial ratios, i.e., liquidity ratios, activity ratios, profitability ratios, debt ratios. Path analysis was used to evaluate causal models by
examining the relationships between a dependent variable (ROE) and independent variables (CR, QR, CSR, DE, EM, TIE, IT, RT, TAT, PM,
EBIT, and ROA. The study sample consisted of 200 firms listed on the Stock Exchange of Thailand in the year 2020. The research results
indicated that during the period of the Coronavirus (COVID-19) pandemic which was a major event in the history and impacted businesses and
economy all over the world, a causal relationship of the financial performance and return on equity was as normal situation. Financial
performance ratios EM, TAT, PM, EBIT, and ROA had positive and significant direct relationship with ROE. The causal relationship model had
R2 equaled to 99%