Corporate Governance and Firm Performance in Sri Lankas Banking, Financial Services, and Insurance Industries
Author(s)
Aliyar Lebbe Isthikar Ali , Amanullah Mohamed Asath , Mohamed Ameen Hathiq Mohamed , Abdul Gafoor Imran Ali ,
Download Full PDF Pages: 119-132 | Views: 163 | Downloads: 55 | DOI: 10.5281/zenodo.7882775
Abstract
The primary goal of this research is to explore the impact of corporate governance on the company performance of Sri Lanka's banking, finance, and insurance sectors. The study specifically looked at CEO duality, the number of directors, the adoption of three key committees, the proportion of independent directors on the board, the proportion of independent directors on the audit committee, the proportion of independent directors on the remuneration committee, the proportion of shares held by the independent directors on the audit committee, the proportion of shares held by the CEO, and the proportion of shares held by the directors excluding the CEO, and how the proportion of shares held by the directors excluding the CEO.
Return on Assets was used to assess corporate performance. (ROA). The population comprised 25 companies registered on the Colombo Stock Exchange in the banking, finance, and insurance sectors. (CSE). The study relied on secondary data, including documentary information from Company annual reports from 2016 to 2020. A multiple linear regression model was used to evaluate the data.
The study discovered a weak association between the Corporate Governance procedures under consideration and the financial performance of the firms. The formation of three Board sub-committees, the number of independent directors, and the proportion of shares held by independent directors on the audit committee and CEO were found to positively improve insurance firms' financial performance. However, the CEO duality, Board size, and proportion of independent directors on the audit committee, proportion of independent directors on the pay committee, and proportion of shares held by the directors excluding the CEO all had a negative impact on financial performance. In order to improve financial performance, the banking, finance, and insurance industries should establish suitable board subcommittees and increase the number of independent directors on the board. Board size should also be lowered as much as feasible, as larger board sizes significantly reduce financial performance.
Keywords
Corporate governance, financial performance
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