Corporate governance and firm performance in periods of financial distress

Abstract

This study investigates the relationship between corporate governance and firm performance employing data from 203 firms listed on the Athens Stock Exchange between 2005 and 2014. This period encompass the sovereign debt crisis erupted in Greece in 2010 and still continues to hit households and businesses alike. The results from the panel regression analysis signify the role of corporate governance in determining the firm performance of the Greek listed firms. In particular, the empirical results reveal a positive impact of board size and composition on corporate performance. Though the role of board size remains unaltered during the crisis period that of outside directors diminishes as the certification provided by auditors seem to replace much of the variation in firm performance. Finally, leverage and liquidity are the two firm-specific factors that their effect was strengthened during the financially-constraint period.