COVID-19 pandemic and firm performance in emerging market: The role of corporate governance

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Abstract

The agent is granted decision-making authority over the company’s operations to achieve the principal’s objectives (Jensen & Meckling, 1976). However, the existence of the COVID-19 pandemic makes companies get higher risks that have an impact on company performance. The board consisting of board size, board independence, women on board, and chief executive officer (CEO) try to maintain the company’s performance during COVID-19. The purpose of this study is to analyze the role of corporate governance which consists of board size, board independence, women on board, and CEO duality on company performance during the COVID-19 period. The sample of this study is 538 companies listed on the Indonesia Stock Exchange (IDX). The results of this study indicate that COVID-19 has had an impact on decreasing the company’s performance. Then, we also found that board size has a significant positive effect on company performance during the COVID-19 pandemic, while board independence, women on board, and CEO duality do not have a significant effect. Then, we interacted with COVID-19 on the company’s performance. The results of our research showed that board size, women on board, and CEO duality have a significant positive effect on company performance. These results have implications that corporate governance has a very important role in boosting the performance of companies that are under pressure due to the COVID-19 pandemic.

Keywords: COVID-19, Board Size, Board Independence, Women on Board, CEO Duality, Firm Performance

Authors’ individual contribution: Conceptualization — D.L. and D.N.; Methodology — D.L.; Software — D.N. and B.R.W.; Validation — D.L. and D.N.; Formal Analysis — B.R.W.; Investigation — D.L. and D.N.; Resources — D.L.; Data Curation — D.N. and B.R.W.; Writing — Original Draft — D.L., D.N., and B.R.W.; Writing — Review & Editing — D.L. and B.R.W.; Visualization — D.N. and B.R.W.; Supervision — D.L.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G01, G32, M48

Received: 17.07.2023
Accepted: 12.02.2024
Published online: 16.02.2024

How to cite this paper: Lesmana, D., Naprida, D., & Wibowo, B. R. (2024). COVID-19 pandemic and firm performance in emerging market: The role of corporate governance. Corporate Law & Governance Review, 6(1), 57–68. https://doi.org/10.22495/clgrv6i1p6