The Effects of Corporate Governance on Company Performance: Evidence from Sri Lankan Financial Services Industry

Abstract

Main purpose of the study is to identify the relationship between corporate governance and company performance of financial service industry of Sri Lanka from financial year 2008-2011. There were 33 banks, finance and insurance organizations listed in the CSE as at 1st April 2007.20 of these organizations have been selected randomly as the sample of the study. The governance variables and performance variables are tested under Simple Linear Regression model to identify any relationships. The three variables related to Corporate Governance are included in this study (Board size, board composition and Audit Committee) while performance of the firms is measured by return on assets (ROA) and return on equity (ROE).the study however could not provide a significant relationship between the two performance measures and corporate governance. These results are consistent with prior empirical study.

Keywords: Corporate Governance, company performance, financial service industry, Sri Lanka.