COVID reflections on corporate governance

Download This Article

Hugh Grove ORCID logo, Maclyn Clouse ORCID logo, Tracy Xu ORCID logo

https://doi.org/10.22495/cgsrv5i1sip1

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

Abstract

The COVID-19 global pandemic has created unique and far-reaching impacts on corporations. Given the essential oversight role of boards of directors, it becomes critical for them to develop strategies as their companies respond to the challenges and risks under these unprecedented circumstances. This paper applies corporate governance principles and action plans for boards to help their companies survive this crisis and build sound business prospects both in the short run and long run. For immediate company survival, this paper encourages boards of directors to focus on short-term liquidity and employ five principles for COVID cash management as proposed in Gifford (2020), including detailed forecasting, setting spending priorities, initiating early communication, shortening reporting cycles, and planning for low cashpoints. Since liquidity does not equate to solvency for company survival, boards of directors also need to focus on long-term solvency by monitoring the new normal of business strategies, including the high likelihood of insolvency among small businesses and mixed solvency situations among large corporation. In addition, this paper identifies the key opportunities for the boards of directors to exploit and strengthen corporate governance during this pandemic period, including advocating a COVID disaster recovery plan with best practices, developing an emergency response checklist, establishing efficient disaster responses, and bolstering monitoring mechanisms for employees, operations, finances, customers, and supply chains (Butcher, 2020). The major sections of this paper are current COVID reflections, a case study of the Hertz Corporation, future COVID reflections, business strategies for the new normal, COVID cash management principles, COVID threats to corporate governance, COVID opportunities for corporate governance, and conclusions.

Keywords: COVID Pandemic, Business Strategies, Corporate Governance

Authors’ individual contribution: Conceptualization – H.G.; Methodology – H.G.; Resources – M.C.; Writing – Original Draft – H.G.; Writing – Review & Editing – M.C. and T.X.; Visualization – T.X.; Funding Acquisition – M.C.

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

JEL Classification: C3, G30

Received: 01.06.2020
Accepted: 05.04.2021
Published online: 07.04.2021

How to cite this paper: Grove, H., Clouse, M., & Xu, T. (2021). COVID reflections on corporate governance [Special issue]. Corporate Governance and Sustainability Review, 5(1), 94-106. https://doi.org/10.22495/cgsrv5i1sip1