Determinants and the Impact of COVID-19 Pandemic Crisis in the Continuity of Cooperative Health Plan Operators Through Liquidity

Abstract

This research investigates Brazil's cooperative health plan operators (CHPOs) from the perspective of continuity in terms of liquidity ratios. The principle of continuity presupposes the going concern basis of the entity where liquidity is a critical issue. A detailed study of CHPO's financial accounting statements was made from a quarterly database from 2018 to 2020 to investigate this phenomenon. Two broad research questions were investigated. The first focuses on identifying the impact of ROA, debt ratios, and the surplus in the liquidity ratios, a crucial aspect to evaluate the going concern basis of CHPOs. The second avenue of research studies the effect of the Covid-19 pandemic crisis on liquidity and debt to equity ratios from CHPOs. Methodologically, a fixed-effects panel and a difference-in-differences model were used to measure the determinants of liquidity ratios and impacts of COVID-19 on CHPOs, respectively. The results pointed out a positive effect of ROA, debt-to-equity ratio, and surplus of CHPOs' liquidity, reinforcing their crucial role in the continuity of these health operators. Additionally, the impact of COVID-19's findings remarks on the significant positive effect of the sanitary crisis on the finances of the CHPOs.

Keywords: Cooperatives health plan operator; continuity; liquidity ratios; COVID-19

JEL Classification: G32