Corporate Governance and Firm Performance of Listed Firms in Sri Lanka
The aim of this study is to examine the relationship between corporate governance structures and firm performance of listed firms on Colombo Stock Exchange (CSE) in Sri Lanka. Data were collected from 174 firms in the financial year 2010 and multiple regression analysis were used to examine whether the existing corporate governance mechanisms influence the firm performance of listed firms in Sri Lanka. The study found evidence that, (i) board size and proportion of non- executive directors in the board shows a marginal negative relationship with firm value, (ii) proportion of non-executive directors in a board and financial performance of firm shows negative relation contrary to the findings of previous studies. The firm size and director shareholdings have a significant impact on firm performance of listed firms in Sri Lanka.
And what are the implications for the banks’ “ethical makeover”? Can conduct cost levels be reconciled with this? Some commentators have, for example, observed that it seems inappropriate to worry about the Co-operative Group potentially losing control over the Co-operative Bank, for fear it will not be able to hold on to its “ethical policies”, when that bank’s ethics are already under suspicion due to the scale (a £269M provision)of its product mis-selling. Do provisions like this reflect on ethics? It’s hard to argue that there is no relationship at all. But perhaps the conduct costs reflect the “bad old days” and, under new management, we can expect banks to improve?