Corporate Governance practices and Firm Performance: Evidence from Sri Lanka

Abstract

Corporate governance received much attention during the last two decades owing to certain economic reforms in countries and accidents of economic history such as regional market crisis and large corporate debacles. The main objective of the study is to find out the significant difference between corporate governance practices on Firm performance. And the secondary objective is to suggest the listed manufacturing firms in Sri Lanka to get the efficiency in the firm performance through the best corporate governance practices. Twenty eight listed manufacturing firms were selected as sample size in Colombo Stock Exchange for the periods 2007, 2008, 2009, 2010 and 2011. Independent sample one – way Anova (f-test) and Independent sample t-test have been utilized to find out the significant difference between corporate governance practices on firm performance. Finding revealed that, there is no significant mean different between the firm performance among corporate governance practices as board leadership structure, board committees, board meetings and proportion of non executive directors. We have suggested that, corporate governance practices should be reviewed in the systematic way to frame the best practices in the current Sri Lankan context.

Key Words: Corporate Governance practices, Firm Performance, Listed Manufacturing Firms.