The effect of corporate governance characteristics on selected financial ratios and firm value before and during the COVID-19 pandemic among publicly listed companies in the Philippines

• Main Authors: Co, Joebert L., Javilinar, Danielz Rafael B.
• Format: text
• Language: English
• Published: Animo Repository 2022
• Subjects: Corporate governance—Philippines; Ratio analysis—Philippines; COVID-19 Pandemic, 2020- —Philippines—Influence; Corporations—Philippines; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etdb_acc/15; https://animorepository.dlsu.edu.ph/cgi/viewcontent.cgi?article=1068&context=etdb_acc
• Institution: De La Salle University

Large, medium, and small businesses across industries have faced various challenges because of the COVID-19 pandemic. These corporations have had to rely on their respective corporate governance to stem the tide of obstacles it has brought. Thus, the study then aimed to determine the effect of chosen corporate governance characteristics on financial ratios and Tobin’s Q amid the pandemic. Furthermore, the study also tackled the effect of COVID-19 pandemic on inter-industry and intra-industry financial ratios. The study had used the annual financial reports of publicly listed companies for the years of 2019 and 2020 in determining the Current Ratio, Quick Ratio, Return on Assets, Return on Equity, Leverage and Tobin’s Q of the said companies. This study included 224 out of 281 publicly listed companies, excluding firms in the Financial Industry, ETF, SMEs, and those who were only listed during 2019 onwards and those who had lacking or unavailable data for years 2019 and 2020. The study had applied statistical methods such as descriptive statistics, Median test, Wilcoxon signed–ranked test, and Partial Least Squares Structural Equation Modeling for its analysis on the gathered data. The findings of the study had found that four out of the five industries had significant differences in their firm value before and during the pandemic with exception only being the Mining and Oil industry. The Holding, Services and Industrial industries have all had significant differences in their Return on Assets before and during the pandemic. Moreover, the Median Test examined the differences in the financial ratios among industries during the pandemic. The results show that the Mining and Oil industry has the fewest ratio that has significant differences with other industries, while the Industrial and Services industry exhibit a similar ratio, and the Holding and Property industry had the most financial ratios that have significant differences with other industries. In addition, the PLS–SEM model tackling the direct effect of the chosen corporate governance characteristics had found that Board size had a negative significant effect on Return on assets during the pandemic. In contrast, Board independence had been found to have a positive significant effect on Return on assets of publicly listed companies during the pandemic. On the other hand, the study had also found statistical evidence that CEO duality had a positive significant effect on both Return on equity and Leverage of publicly listed companies during the pandemic. Lastly, the PLS-SEM model also examined the effect of the latent variable, Corporate Governance Score, and the control variables, firm age, and firm size on Financial Ratios Score and firm value. The results highlighted that the CGS had a significant negative effect on the FRS and firm value of the Mining and Oil Industry.