Covid-19 and performance disclosure: does governance matter?

Purpose: This paper investigates whether Covid-19 related information is associated with a higher level of performance disclosure in the annual reports. Furthermore, it examines the moderating effect of corporate governance on the relationship between Covid-19 and the performance disclosure by using three governance mechanisms: board size, board independence, and gender diversity.

Methodology: We use quantitative content analysis. We applied an automated textual analysis technique to measure the level of Covid-19 information and performance disclosure for the UK FTSE all-share non-financial firms.

Findings: We found a significant positive relationship between the Covid-19 disclosure and the firm performance disclosure in the annual reports. We also find that both board independence and gender diversity moderate the relationship between the Covid-19 related information and the level of performance disclosure in the annual reports. We further run a robustness analysis, which confirms our main results.

Originality: We contribute to the literature in a unique and core research area not researched previously. Our paper links the Covid-19 disclosure with the firm performance from the corporate narrative perspective. Our paper underlines governance factors as a moderating role in this relationship by considering three main mechanisms: board size, board independence, and gender
diversity.

Practical and social implications: Our finding is beneficial for the regulatory setters to better understand whether firms provide generic or meaningful Covid-19 information linked to the firm's performance. The unique findings of this paper are relevant to regulators, governments, management, shareholders, and academics.