The Implications of the COVID-19 Pandemic on Corporate Governance: The Board of Directors’ Response

The COVID-19 pandemic poses a threat to the global economy, leading to the risk of a systemic crisis with devastating global economic impacts. These circumstances have put a strain on corporate governance systems, which have had to address major new problems and challenges. This chapter aims to investigate the board’s reaction to the COVID-19, by providing an overview of the actions taken at the corporate governance level in the first phase of the pandemic. We first look at the actions taken by companies to support corporate governance; second, we examine the strategic actions implemented by companies; and finally, we investigate the actions taken by the board that had financial impacts on firms. In order to achieve our goal, we used the methodology of framing analysis. In particular, this study investigated the content of press releases of Italian FTSE MIB (Financial Times Stock Exchange – Milan Stock Exchange Index) companies. Our findings show that the corporate governance of the examined firms has implemented cost reduction actions, carrying out action plans aimed to mitigate the financial impacts related to COVID-19. Regarding changes to top management remuneration policies, some companies have updated their short- and medium-term strategy or developed a new shareholder remuneration policy. In addition, most of the analyzed firms have put in place initiatives to actively support the country’s efforts to overcome the current emergency by providing means and resources. The analysis of corporate press releases revealed that the COVID-19 pandemic challenged corporate survival. As such, our contribution has practical implications by providing an overview of the actions taken by corporate governance to respond to the COVID-19 pandemic. Moreover, our study can serve as a support tool for firms in the process of defining actions and strategies to respond to crisis events, especially if they affect the whole economic system.