wang, siqi
(2022)
Corporate governance and firm performance during the Covid-19 pandemic.
[Dissertation (University of Nottingham only)]
Abstract
This paper focuses on the relationship between corporate governance mechanisms and performance as a result of the Covid-19 outbreak. Corporate governance has been a widely researched area by scholars and there has been a steady flow of relevant research. There is no definitive structure for effective corporate governance mechanisms, as there are differences in the governance mechanisms that match the industry, country and characteristics of the company. While differences do exist, corporate governance mechanisms still focus on the board of directors, organisational structure and external regulatory mechanisms. However, with the outbreak of Covid-19, the global corporate governance environment has changed and this paper seeks to examine the effectiveness of governance mechanisms during the crisis by comparing the relationship between performance and governance mechanisms of FTSE100 UK companies before and after Covid-19.
Based on agency theory (the core theory of this paper), stewardship theory and relevant literature in the field, this study uses a hypothetical deductive approach to formulate four hypotheses based on the four internal governance mechanisms selected. Subsequently, using a quantitative analysis research approach, two multiple linear regressions were developed using the UK FTSE100 performance indicators (measured by ROA and Tobin Q respectively) for the years 2018-2021 as the dependent variables, selecting board size, the proportion of non-executive directors, CEO duality and ownership structure as independent variables, and choosing firm size and leverage as control variables. The model with Tobin Q as the performance measure was used as a robustness test. Based on the analysis of the regression results, only board size was significantly related to performance before Covid-19, while it was not related to performance after the epidemic, so only the hypothesis on board size was accepted, i.e. only the relationship between board size and performance changed with the epidemic. The other variables were not correlated with performance either before or after the epidemic and did not change. This study contributes to the theory, limited literature, and practice and policy development on corporate governance by providing empirical evidence on the impact of Covid-19 on the association between firm performance and corporate governance.
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