ISSN: 2225-8329
Open access
This study investigates the impact of cash flow activities, leverage, and liquidity on the performance and recovery of Malaysian construction firms in the post-Covid-19 period. Using a sample of 68 listed firms from 2021 to 2023, the analysis employs financial ratios such as return on assets (ROA) and return on equity (ROE) as performance indicators. The results indicate that leverage has a significant negative effect on firm profitability, while liquidity and cash flows from operating activities exert a positive and significant influence. Cash flows from investing and financing activities, however, show weak or insignificant relationships with firm performance. These findings suggest that construction firms with higher liquidity and stronger operational cash inflows were more resilient during the recovery phase, whereas reliance on debt financing weakened performance outcomes. The results are consistent with the Trade-off Theory, which emphasizes the balance between the benefits and costs of debt. This research contributes to the understanding of capital structure and financial management during crises by highlighting that optimal recovery is achieved through prudent leverage management and maintaining adequate liquidity reserves. Practical implications are offered for managers and policymakers to strengthen financial resilience in the construction sector against future shocks.
Ankomah, K., Aidoo-acquah, K., Ofori-oppong, P., & Arpoh-baah, B. (2023). The Effects of Cash Flow Management on the Financial Performance of Listed Manufacturing Firms in Ghana. Research Journal of Finance and Accounting, 14(16), 47–55. https://doi.org/10.7176/rjfa/14-16-05
BNM. (2023). Malaysia’s Economic Resilience: A Post-pandemic Analysis.
Frank, B. P., & James, O. K. (2014). Cashflow and Corporate Performance:a Study of Selected Food and Beverages Companies in Nigeria. European Journal of Accounting Auditing and Finance Research, 2(7), 77–87. www.eajournals.org
Jafino, B. A., Walsh, B., Rozenberg, J., & Hallegatte, S. (2020). Revised Estimates of the Impact of Climate Change on Extreme Poverty by 2030. In Revised Estimates of the Impact of Climate Change on Extreme Poverty by 2030 (Issue September). https://doi.org/10.1596/1813-9450-9417
Kalemli-özcan, S., & Laeven, L. (2003). Working Paper Series. Review, 85(6). https://doi.org/10.20955/r.85.67
Lim, L. L. (2020). The socioeconomic impacts of COVID-19 in Malaysia: Policy review and guidance for protecting the most vulnerable and supporting enterprises. In International Labour Organization. http://ilo.org/wcmsp5/groups/public/---asia/---ro-bangkok/documents/publication/wcms_751600.pdf
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. https://doi.org/10.1080/1540496X.2020.1785863
Sun, T. (2020). MCO to slow construction sector growth to 2.4%. https://thesun.my/business-news/mco-to-slow-construction-sector-growth-to-24-DK2185959
Zainol, Z. (2021). The Impact of COVID- 19 Pandemic on Firms ’ Profitability and Leverage?: Evidence from Malaysian Public Listed Companies. An International Journal, 13(4), 712–719.
Aziz, N. I. M., & Noor, N. R. A. M. (2026). Performance and Firm Recovery Post Covid-19 Outbreak of Construction Sector: The Impact of Cash Flows Activities, Leverage and Liquidity. International Journal of Academic Research in Accounting, Finance and Management Sciences, 16(2), 99–109.
Copyright: © 2026 The Author(s)
Published by HRMARS (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode