Abstract:
Corporate governance practices are very important to the corporates and its
impact to the company’s performance is much debated areas. Good corporate
governance practices enable to reduce the risk of the investors, to attach more
investments and to improve the performance of companies. This study
analyzed the current context of corporate governance and firm performance in
listed companies in Sri Lanka. Data and other reliable information are taken
from the audited financial statements and the governance section of annual
reports from each selected companies. The sample was obtained from the
“business today top 25 companies 2014- 2015” journal article, for the period
from 2010 to 2014. Descriptive statistics, Pearson’s correlation, regression
analysis and analysis of variance were applied to analyze the relationship
between corporate governance and firm performance. The results shows that
there is a positive relationship between corporate governance practices and
ROE and ROA, in the Sri Lankan context. And also it was found that the
relationship between number of meetings that hold by the companies and
board composition with ROE and ROA is negative, and the relationship
between Board committees and Board leadership structure with ROA or ROE
is Positive. It is concluded that there is a positive relationship between
corporate governance and firm performance in listed companies in Sri Lanka.
On the other hand, some corporate governance practices were significantly
related with firm performance and some other corporate governance practices
were insignificantly related with firm performance.
