A COMPARATIVE STUDY OF CAPITAL STRUCTURE AND FIRM VALUE: PRE- AND POST-COVID-19 PANDEMIC AMONG LISTED COMPANIES ON THE STOCK EXCHANGE OF THAILAND

Abstract

This study considers the relationship between capital structure and firm value among Thai listed firms, comparing this relationship across three time phases—pre-COVID-19 (2018–2019), during COVID-19 (2020–2021), and post-COVID-19 (2022–2023). Using firm-level accounting and market data from the Stock Exchange of Thailand (SET) (n=423), the study estimates period-specific regressions that link leverage to standard determinants and assess the leverage value association (Tobin’s Q). The results reveal a crisis-phase decoupling: the positive association between leverage and firm value observed before the pandemic disappears during the pandemic and re-emerges afterward. Determinants of leverage also shift across phases: higher operating cash flow is consistently associated with lower leverage, tax-related incentives are effective mainly in normal times, and the roles of asset tangibility and liquidity invert in the Thai context when market conditions tighten. These findings highlight the context-specific nature of financing decisions in emerging markets and clarify why leverage can alternately amplify or dampen firm value across macroeconomic regimes. The study contributes comparative evidence for a three-phase COVID framework and underscores practical levers, particularly liquidity backstops and calibrated tax instruments that can help firms sustain investment and employment during downturns while discouraging excessive debt during recovery. SET firms have overcome COVID-19, serving as a positive signal for both domestic investors and foreign investors.