Corporate governance in the COVID-19 pandemic: current practices and potential improvement

Abstract

Purpose The purpose of this paper is to analyse the effect of the COVID-19 pandemic on corporate governance and internal control in general. In addition, this paper attempts to develop a new corporate governance model that flexibly addresses conditions like those brought into the business environment by COVID-19. Design/methodology/approach Thirteen semi-structured interviews were conducted with chairpersons, CEOs and directors from companies listed on the FTSE 350. Findings This study suggests a corporate governance model, which we call Eunomia, which we believe will help businesses to navigate the unusual conditions resulting from COVID-19 and similar types of crises that lead to major disruption for businesses and society. The model includes five pillars that support governance, namely, flexibility, IT infrastructure, risk management, internal control and policies and procedures. Practical implications Implications for practice and policymakers. Based on the research outcomes, the authors suggest that the board of directors establishes policies that ensure supply diversity and that businesses do not rely on a single or limited number of suppliers, thereby making themselves vulnerable to supply chain disruption with those suppliers. Originality/value This paper presents an original contribution to the accounting literature relating to corporate governance and internal control systems, specifically in terms of how businesses can optimally operate under uncontrollable conditions resulting from pandemics, and similar situations.