The Nexus Between Corporate Governance and Firm Performance During COVID-19 Pandemic in Sri Lanka

Abstract

The COVID-19 has redefined the world operation. Specially COVID-19 pandemic shows a higher impact on the business field. Accordingly, this study aims to find the impact of corporate governance on firm performance during the Covid-19 pandemic in Sri Lanka. The quantitative methodology deployed and secondary data was collected from 27 companies listed in Colombo Stock Exchange (CSE) for 209 and 2020. The results depicted that pandemic has affected the Corporate Governance (CG) measures unfavorably. Further, board size and qualification of director’s show a positive association between firm performance meantime, NED proportion, Gender diversity, Board meeting, Audit committee size and Audit committee meeting show a negative association between firm performance. It clearly reveals that COVID-19 severely impact the corporate governance attributes and firm performance. The corporate management, regulators, and investors must consider the board’s board size and qualification to recover the corporate sector in any crisis. This study provides a unique contribution to the literature of COVID-19 and firm performance in emerging economies.

The implications of the pandemic for the corporate governance, remuneration and sustainability performance of South African listed companies

“…Attention is being shifted to the COVID -19 pandemic to corporate governance and sustainability. Generally, there have been limited studies on how the COVID-19 pandemic has influenced corporate governance, firm performance and corporate sustainability [2,18]. According to the authors' opinion and the depth of their research findings, this study is the first to examine and combine the COVID 19 pandemic with corporate governance, performance, sustainability and remuneration in a single study.…”

“…For a company to be sustainable, transparent, accountable, effective and efficient, good corporate governance must be in place [6,16]. Many researchers have written on the impact of the pandemic on companies' performance [17,18] but very few studies have focused on how companies operated or survived in the odd period. There have been reactions from different sectors and stakeholders wanting to know the extent of the pandemic impact on companies' operations and practices and how quick recovery can be achieved.…”

“…Companies' managements found it difficult to adjust to these sudden changes and developments, thereby affecting growing companies and creating gaps between companies and their stakeholders. Many studies have revealed that the pandemic impacted every aspect of daily life which includes corporate governance [17,18]. Present research studies have dwelt extensively on corporate governance and company performance and there seems to be consensus that corporate governance improves company performance [17,19,20].…”

“…Present research studies have dwelt extensively on corporate governance and company performance and there seems to be consensus that corporate governance improves company performance [17,19,20]. However, a few scholars suggested the need to re-examine corporate governance and firm performance amidst the COVID -19 pandemic, and a few studies in this regard revealed that the pandemic had a serious impact on company performance [17,18,21]. Hence, the need for more studies to examine the COVID-19 pandemic and company performance is inevitable.…”

“…However, the pandemic's era suggested the need to re-examine the implications of the pandemic for corporate governance and firm performance. A few studies have been conducted related to the COVID-19 pandemic and company performance [2,18]. These studies revealed that the COVID 19 pandemic negatively impacted company performance.…”