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

Abstract

The study examined the implications of the recent pandemic on the corporate governance, remuneration and corporate sustainability performance of South African listed companies. Data from 42 companies was analyzed using the panel fully modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS) methods from 2010-2021. Findings revealed that the pandemic negatively impacted the selected companies. This study revealed that the pandemic had a good impact on some companies and not just bad ones as claimed by previous researchers. Results from COVID -19- related expenses, debt-to-equity ratios and staff costs revealed a negative but significant result in the estimated model. Other variables such as current ratios, net profit margins and board diversity revealed a positive and significant relationship with all the dependent variables. Hence, a very severe implication of the pandemic on the performance of companies is confirmed through COVID -19related expenses, staff costs and directors’ remuneration. These have a very strong negative impact on the future performance, survival, and sustainability of the selected companies. Lastly, a strong relationship between corporate governance and corporate sustainability performance was confirmed as shown by ROA, board size, directors’ remunerations and board diversity. This study provides insight for stakeholders such as governments, directors and policymakers to develop both preventive and proactive policies to protect and guide companies from future similar pandemics. To avert and prevent future negative implications on companies, this study recommends a well- structured scheme for all of the company’s staff, cash reserves and IT governance.

Leadership in heels: Women on boards and sustainability in times of COVID‐19

“…Additionally, we observe that in those companies that have suffered a drop in their economic activity, the presence of female directors favor initiatives on environmental issues. So, the different estimations of Equation () confirm that the pandemic has caused relevant adverse economic impacts for companies, but women directors understood that sustainability is the right strategy to the firm's survival, as Crane and Matten (2021) and Ajeigbe and Ganda (2023) justified. These are the reasons why they contribute to maintain sustainability commitment and anticipate the different stakeholders' demands to satisfy them.…”

“…It must be borne in mind that the pandemic has provoked a humanitarian and economic panic, causing economies to struggle to alleviate it and many companies to collapse due to its negative consequences (Anggadwita et al, 2022; Ajeigbe & Ganda, 2023; Phang et al, 2023; Sharif et al, 2020; Tettamanzi et al, 2022; Zhang et al, 2020). Also, we currently live in a state of continuous alert due to the appearance of variants that cause different waves of contagion that make it difficult to achieve a status of continued normality (Pitofsky, 2020).…”

“…On the other hand, several firms have adopted an opposite strategy with a higher commitment with new ecological investment to guarantee employment, equality, and economic recovery, using an interactive communication strategy with these stakeholders. Therefore, these firms use sustainability as a tool to manage risks (Ajeigbe & Ganda, 2023; Crane & Matten, 2021), oriented toward the following risks and responsibilities: (i) social level: employees (health and labor conditions), supply chain responsibilities/vulnerability and societal inequalities; (ii) governance: shareholder interests, transparency, and good governance principles; and (iii) environment: commitments, above all, in the fight against climate change. All of them, according to Carroll (2021), lead to wondering what companies should do to help alleviate the adverse effects of the pandemic in these uncertain times for them.…”

Examining the impact of corporate governance and corporate financial reporting on firm value: A study of selected banks in Nigeria

“…Corporate governance is expressed as a recognized set of principles, regulations, requirements, processes, ethical codes, and organizational structures that underpin effective and strong organizational practices to ensure the effective balancing of diverse interests of stakeholders, as well as sustain the economic growth of the company (Ajeigbe & Ganda, 2023;Pandya & Van Deventer, 2021;Smith & Marx, 2022;Thanh Tiep, Quang Huan, Thi Thuy Hong, & Khoa Tran, 2021;Zollo, Laudano, Boccardi, & Ciappei, 2019). Effective tools for attaining corporate goals, identification of corporate risks, risk assessment, and formulation of control measures to mitigate risks lie within the purview of corporate governance.…”