Abstract:
The purpose of this study is to examine the relationship between
selected board characteristics and firm performance on listed
companies on the Colombo Stock Exchange (CSE) in Sri Lanka.
The study is performed on 41 non-financial and financial year’s
ended on 31st March listed companies of CSE according to the
highest market capitalization as of 20th January 2020. Descriptive
statistics, correlation analysis and multivariate regression analysis
are used to analyze the relationship between selected board
characteristics and firm performance. As per the findings of this
study, board composition is positively associated with Return on
Asset (ROA) and Return on Equity (ROE). However, the gender
diversity of the board shows a negative relationship between
ROA and ROE. Other selected board characteristics of this study
(Board size, CEO duality, frequency of board meetings, directors’
shareholding, presence of nomination committee) demonstrate
ambiguous results with ROA and ROE. The findings of the study
are supportive for policymakers, especially the top-level
management, and decision-makers in respect of obtaining
strategic decisions about the firm to establish an effective board
and evaluate the effectiveness of the board inside the firm.
Moreover, it will be useful for regulators to strengthen prevailing
governance mechanisms attributed to the board of directors
(BOD). Additionally, the finding will contribute to narrowing the
existing indefinite results regarding the relationship between
board characteristics and firm performance.
