Corporate Governance and Financial Performance in Times of the Pandemic

This thesis aims to prove whether specific corporate governance mechanisms help listed companies to support their performance when responding to COVID-19. Company data from the French SBF120, UK FTSE100 and German DAX100 index firms for 2010 to 2020 and 2020 exclusively was studied, capturing different economic states. Based on agency theory and several corporate governance studies, we hypothesize that firms that conform with corporate governance best practices show better corporate performance during the crisis. Therefore, the explanatory variables of the research are board size, CEO/Chairman duality, board independence, board ownership and the largest five shareholders, which operate as corporate governance proxies. The financial, operational, and market-based firm performance is measured by LogROE, LogROIC and LogTobin ́s Q, respectively. OLS and Panel Regression within a quantitative research framework are applied to verify our hypotheses. Hereby, the statistical analysis follows a comparative approach: first, the regression outcomes for all years from 2010 to 2020 are reviewed. After that, it examined if these results as well sustain for the crisis year 2020. The results provide evidence for the second and third research hypotheses: It is found that the separation of CEO and chairman roles and a higher level of board ownership help firms better overcome the unexpected financial shock created by COVID- 19. However, we need to limit the research findings since they refer to observations of a small crisis period, solely including the first two pandemic waves. Therefore, the results must be re-examined when additional data becomes available.