Impact of selected board characteristics on firm performances of listed manufacturing firms in Sri Lanka

Abstract

This study designed to investigate the association between selected board characteristics and firm performances of organisations registered under the manufacturing sector of the Colombo Stock Exchange. Accordingly, 28 companies have been used as sample over four years (2014 -2017) with the main objectives to measure the level of corporate governance and board characteristics of selected companies and to examine their association. ROA and ROE used as the dependent variables of the study and board size, board independence, board meetings, board diversity, CEO duality and existence of nomination committee as board characteristics used as independent variables while controlling for three variables (i.e., firm size, age and leverage). Results obtained via correlation analysis, OLS regression and panel regression showcase that only board diversity and existence of nomination committee possess the significant impact on firm performances. Leverage is the only control variable which become negatively significant in explaining the variation of firm performances. The study suggests vital managerial implications to policy makers in reforming and strengthening corporate governance guidelines to achieve higher firm performance.