Application of Corporate Governance Practices in Companies Listed in CSE Sri Lanka

Purpose: The purpose of the article is to find out the application of corporate governance practices in companies listed CSE in Sri Lanka. Methodology: The study aimed at the factors influence in the application of corporate governance practices and firm’s financial performance in Sri Lanka. In this study, there are two dependent variables namely return on equity and return on asset and four independent variables namely board leadership, board structure, board size and number of board committees. The study used 20 top companies (blue-chip companies) as sample for period of five (5) years 2014-2018. The data was analyzed using the SPSS statistical software package. The descriptive statistics, correlation analysis and regression analysis were used in this study. Findings: The results show that there is a positive relationship between corporate governance practices and firm performance, in the Sri Lankan context. And also it was found that there is a positive effect of board leadership board structure, board size and board committees on ROE and ROA the effect of board leadership, board size and board committees are significant with ROE & ROA. Only board structure has an insignificant effect on ROE and ROA.

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PENGARUH CORPORATE GOVERNANCE TERHADAP KINERJA PERUSAHAAN MANUFAKTUR YANG TERDAFTAR DI BURSA EFEK INDONESIA

Jurnal Manajemen dan Pemasaran Jasa ◽

10.25105/jmpj.v6i0.511 ◽

2016 ◽

Vol 6 ◽

pp. 109

Author(s):

Susy Muchtar ◽

Elsa Darari

Keyword(s):

Corporate Governance ◽

Firm Performance ◽

T Test ◽

Board Structure ◽

Executive Directors ◽

Return On Assets ◽

Return On Equity ◽

Board Committees ◽

Negative Effect ◽

Positive Effect

The purpose of this research is to determine the effect of corporate governance on the firm performance of companies listed in the Indonesia Stock Exchange.The sample examined in this research consist of 40 manufacturing companies in Indonesia Stock Exchange (BEI) from 2008 to 2012 using purpose sampling as its sample selection techniques. Independent variables from this research are board structure, board committees, board meetings, board size, executive directors and independent non-executive directors. Dependent variables are return on assets (ROA) and return on equity (ROE). The analysis method use are the classical assumption test, multiple regression, and the t test. the result of the t test showed, board structure has no effect on corporate performance as measured by return on assets (ROA), but a negative effect on company performance as measured by return on equity (ROE), board committees positive effect on the firm performance, board meetings had no influence on the performance of the company, board size has a positive effect on the firm performance, executive directors do not have an influence on the company’s performance as measured by return on assets (ROA) and return on equity (ROE), independent non-executive directors have a negative effect on corporate performance as measured by return on assets (ROA), but does not affect the company’s performance as measured by return on equity (ROE). Keywords: Corporate governance, firm performance, board structure, board committee, board meeting, board size, executive directors, independent non executive directors, return on asset, return on equity.

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Board structure-performance relationship in microfinance institutions (MFIs) in an emerging economy

Corporate Governance ◽

10.1108/cg-12-2015-0166 ◽

2016 ◽

Vol 16 (5) ◽

pp. 815-830 ◽

Cited By ~ 4

Author(s):

Sujani Thrikawala ◽

Stuart Locke ◽

Krishna Reddy

Keyword(s):

Corporate Governance ◽

Sri Lanka ◽

Financial Performance ◽

Emerging Economy ◽

Board Structure ◽

Microfinance Institutions ◽

Policy Makers ◽

Content Type ◽

Regulatory Status ◽

Governance Practices

Purpose The purpose of this paper is to investigate the relationship between board structure, financial performance and outreach of microfinance institutions (MFIs) in Sri Lanka, using unbalanced panel data for 300 MFI-year observations for the period 2007 to 2012. Design/methodology/approach Empirical research relating to governance practices in MFIs is still in its infancy, and further studies are needed to determine how improved governance practices may enhance sustainability and outreach of MFIs, especially in emerging economies. The authors use regression techniques to examine whether board structure has an influence on MFI performance. Findings After controlling for internal corporate governance variables, regulatory status, size, age, leverage and year effects, the authors report that board structure does contribute to the financial performance and outreach of MFIs in Sri Lanka. Research limitations/implications The availability of data in the public domain captures the major MFIs but does constrain the generalisability of findings. Practical implications This study enables individual MFIs to evaluate potential restructuring of their boards to promote a dual mission and achieve a more accelerated economic development. Social implications The findings may encourage policy makers to promulgate policy guidelines to deepen MFI outreach to the poorest people. Originality/value Inconsistent findings in prior studies and a general lack of empirical results for the microfinance industry have led to an unclear message regarding corporate governance and MFI performance. This study fills the research gap, contributing to the existing corporate governance literature in the microfinance sector and providing evidence from an emerging economy.

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Effect of corporate governance on the financial performance of commercial banks in Nigeria

Banks and Bank Systems ◽

10.21511/bbs.15(3).2020.06 ◽

2020 ◽

Vol 15 (3) ◽

pp. 55-69

Author(s):

Lawrence Uchenna Okoye ◽

Felicia Olokoyo ◽

Johnson I. Okoh ◽

Felix Ezeji ◽

Rhoda Uzohue

Keyword(s):

Corporate Governance ◽

Financial Performance ◽

Firm Size ◽

Good Governance ◽

Generalized Method Of Moments ◽

Board Size ◽

Return On Equity ◽

Governance Practices ◽

Banking Institutions ◽

Business Entities

Banks are expected to operate within acceptable standards of governance for consistent profitable operations. They run heavily on customer deposits, which is confidence-driven. Since the quality of governance is critical to winning and retaining customer confidence and patronage, the imperative for good governance practices in banks cannot be overemphasized. This research paper explores the nexus between governance practices and bank profitability in Nigeria. It adopts the size of bank board and directors’ stake as proxies for corporate governance, with return on assets and return on equity as representations for financial performance. The research incorporates firm size as a controlled variable. The estimation technique of the Generalized Method of Moments was employed. Evidence from the research reveals that board size, directors’ equity, and firm size substantially affect Nigerian banks’ financial performance. Besides, the study shows a robust effect of lagged return on equity on the current level of performance. Therefore, the study asserts that governance in business entities strongly affects their financial performance and recommends maintaining optimum board size to minimize boardroom conflicts. It further prescribes that the requirement for substantial equity stake by directors of banking institutions be sustained, as it secures commitment to governance practices that support profitability. AcknowledgmentThe authors acknowledge the support of Covenant University towards the publication of this paper.

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Relationship between Code of Corporate Governance and Corporate Financial Performance (An Empirical Study of Food Companies Listed on KSE)

GIS Business ◽

10.26643/gis.v12i4.3349 ◽

2017 ◽

Vol 12 (4) ◽

pp. 01-09

Author(s):

Asma Rafique Chughtai ◽

Afifa Naseer ◽

Asma Hassan

Keyword(s):

Corporate Governance ◽

Stock Exchange ◽

Securities And Exchange Commission ◽

Executive Directors ◽

Agency Conflicts ◽

Cross Sectional ◽

Return On Equity ◽

Governance Practices ◽

Code Of Corporate Governance ◽

The Impact

The crucial role that implementation of Code of Corporate Governance plays on protecting the rights of minorities, shareholders, local as well as foreign investors cannot be denied. Companies all over the world are required to implement their respective Code of Corporate Governance for avoiding agency conflicts between companies management and stakeholders and for assuring transparency in accountability. This paper aims at exploring the impact of implementation of corporate governance practices (designed by Securities and Exchange Commission of Pakistan) have on the financial position of companies. For explanatory variables of the study, composition of the board as per the Code of Corporate Governance that comprises of presence of independent, executive and non-executive directors has been taken into consideration. Return on equity has been taken as an indicator of firms profitability i.e. the dependent variable. For this study, companies listed on food producing sector of Karachi Stock Exchange have been screened for excogitation of the relationship. It is an empirical research based on nine years data from 2007–2015. Using Hausman Test for selecting the data analysis technique between Fixed or Random, Fixed Cross Sectional Panel Analysis has been used for analysis of the data collected. Findings indicate that presence of independent, executive and non-executive directors as per the code requirements levies a significant impact on the profitability of companies indicated by return on equity. It is, thus concluded that companies should ensure compliance with code of governance practices to reduce not only the agency issues but also to increase their profitability.

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Impact of corporate governance on financial performance of sugar sector firms listed in Pakistan stock exchange

10.34091/ajss.12.2.10 ◽

2019 ◽

Vol 12 (2) ◽

Author(s):

Muhammad Wasim Jan Khan ◽

Usman Saeed

Keyword(s):

Developing Countries ◽

Corporate Governance ◽

Financial Performance ◽

Firm Size ◽

Stock Exchange ◽

Balance Sheet ◽

Board Size ◽

Return On Equity ◽

Firm Financial Performance ◽

Relationship Of

Corporate governance is considered as environment of trust, set of processes, policies and laws affecting the way corporations are administrated and directed. The previous literature in context of the corporate governance relationship with firm financial performance shows controversial findings; similarly literature shows lack of studies in context of developing countries as Pakistan. Therefore, this research explores the relationship of the corporate governance and the firm financial performance in context of developing country as Pakistan. The data has been collected from the sugar sector listed in KSE (Pakistan Stock Exchange), 20 corporations are selected as sample from sugar sector on basis of outstanding shares. Corporate governance taken as independent variable and measured as CEO biformity (CB), board size (BS), firm age (FA), firm size (FS). Financial performance of firms taken as dependent variable and measured as return on asset (ROA), return on equity (ROE), net profit margin (NPM). Data is collected for period of 2000-2013 from reports of the sugar companies listed in KSE (Pakistan Stock Exchange) issued annually and analysis of balance sheet given by State Bank of Pakistan (SBP). Result shows that CEO biformity significantly affecting firm financial performance. Board size (BS) shows partially significant impact on firm financial performance. Firms age (FA) show partially significant impact on firm financial performance. Firm size (FS) shows partially significant impact on firm financial performance. Therefore, conclusion has been drawn based on the results of analysis that this study adds new knowledge to the existing body of knowledge of corporate governance impact on firm financial performance and in context of developing countries as Pakistan. Keywords: Corporate governance, firm financial performance, sugar sector, Pakistan.

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Corporate Governance, Political Connections, and Bank Performance

International Journal of Financial Studies ◽

10.3390/ijfs7040062 ◽

2019 ◽

Vol 7 (4) ◽

pp. 62 ◽

Cited By ~ 3

Author(s):

Haris ◽

Yao ◽

Tariq ◽

Javaid ◽

Ain

Keyword(s):

Corporate Governance ◽

Profit Margin ◽

Political Connections ◽

Return On Assets ◽

Board Size ◽

Bank Profitability ◽

Return On Equity ◽

Net Interest Margin ◽

The Impact ◽

Interest Margin

This study investigates the impact of corporate governance characteristics and political connections of directors on the profitability of banks in Pakistan. The study uses the data of 26 domestic banks over the latest and large period of 2007–2016. Our findings firstly affirm that bank profitability is negatively affected by the presence of politically connected directors on the board, reporting significantly lower return on assets, return on equity, net interest margin, and profit margin. Secondly, our findings also affirm the negative political influence on the sustainability of the banking industry, reporting significantly lower return on assets, return on equity, net interest margin, and profit margin during the government transition of banks having politically connected directors sitting on their board. Our findings further report an inverted U-shaped relationship between board size and bank profitability, suggesting that a board size beyond 8–9 members decreases the profitability. The study further finds a positive impact of board composition, board independence, and director compensation on bank profitability, while also finding a negative impact of frequent board meetings, presence of foreign directors, and audit committee independence.

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Impact of Corporate Governance on Financial Performance: Karachi Stock Exchange, Pakistan

Business and Economic Research ◽

10.5296/ber.v6i2.9772 ◽

2016 ◽

Vol 6 (2) ◽

pp. 401 ◽

Cited By ~ 1

Author(s):

Aon Waqas Awan ◽

Javed Ahmed Jamali

Keyword(s):

Corporate Governance ◽

Financial Performance ◽

Audit Committee ◽

Stock Exchange ◽

Profit Margin ◽

Audit Committees ◽

Board Size ◽

Good Decision ◽

Return On Equity ◽

The Impact

The aim of the research is to understand the impact of corporate governance on financial performance of listed companies on Karachi Stock Exchange Pakistan. Data was collected from forty two companies from different sectors like, insurance, banking, investment banking, and sugar industries. Study includes variables like profit margin & return on equity as a dependent (profitability) and board size, audit committee, annual general meetings & chief executive office (corporate governance). Using Pooled OLS, the result of the study proved those board size and audit committees have positive relationship with Profit margin and Return on Equity, if any independent variable changes it also stimulus the positively changing impact on Return on Equity (ROE) and Audit Committee (AC). This research offers imminent guidelines to the policy and decision makers in any type of firms to take good decision to set their firms hierarchy system.

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Short-run price performance of IPOs and corporate governance practices: Evidence from a frontier market

Corporate Governance and Sustainability Review ◽

10.22495/cgsrv2i1p3 ◽

2018 ◽

Vol 2 (1) ◽

pp. 34-42 ◽

Cited By ~ 3

Author(s):

SMRK Samarakoon ◽

KLW Perera

Keyword(s):

Corporate Governance ◽

Initial Public Offerings ◽

Negative Impact ◽

Stock Exchange ◽

Sri Lankan ◽

Governance System ◽

Public Offerings ◽

Price Performance ◽

Governance Practices ◽

Short Run

The short-run price performance of Initial Public Offerings (IPOs) indicates that the prices are often underpriced which is widely documented as a universal phenomenon. Corporate governance refers to the set of systems, principles and processes by which a company is governed. Establishing good corporate governance system in an IPO company makes good decisions which attract more outside investors. Therefore, this study examines whether there is any impact of corporate governance practices on short-run price performance of Sri Lankan IPOs. Study examined 44 fixed price IPOs which were listed on the Colombo Stock Exchange (CSE) during the period of 2003 – January to 2015- December. The study found that Sri Lankan IPOs underprice by 30% on AR, which is statistically significant at 5% level. Further, it found that block holder ownership (ownership concentration), CEO duality and existence of the non-executive directors in the board are positively related to the short-run underpricing, which are statistically significant at 5%. But, the board size has a significant negative impact on underpricing. These relationships are in line with the international literature which confirms that the corporate governance practices have significant impact on short-run price performance of IPOs in Sri Lanka. These findings also support the agency and signaling theories.

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Board size and firm operating performance: Evidence from Germany

Corporate Board role duties and composition ◽

10.22495/cbv5i1art4 ◽

2009 ◽

Vol 5 (1) ◽

pp. 37-47

Author(s):

Andrea Graf ◽

Markus Stiglbauer

Keyword(s):

Operating Performance ◽

Board Structure ◽

Corporate Boards ◽

Optimum Size ◽

Negative Effects ◽

Return On Assets ◽

Board Size ◽

Return On Equity ◽

Listed Firms ◽

Management Board

Determining the optimum size of corporate boards is an important task for companies. Agency theory suggests that either too large or too small boards cause negative effects on firm operating performance. For a given sample of 113 listed firms in the German Prime market, we tested the effect of board size on return on assets and return on equity. Our findings provide evidence that there is a significantly negative Management Board size effect both on return on assets and return on equity. The results are consistent with the assumption of dysfunctional norms of behaviour within the German two-tier board structure.

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Board of directors, performance and firm value in Brazilian listed state-owned enterprises

Brazilian Review of Finance ◽

10.12660/rbfin.v18n2.2020.80898 ◽

2020 ◽

Vol 18 (2) ◽

pp. 1

Author(s):

Carolina Coletta ◽

Roberto Arruda de Souza Lima

Keyword(s):

Corporate Governance ◽

Firm Performance ◽

Board Of Directors ◽

Firm Value ◽

Board Structure ◽

Agency Conflicts ◽

Governance Practices ◽

The Board Of Directors ◽

Structure Index ◽

Corporate Governance Practice

This paper investigates the relationship between the board of directors' structure and firm performance and the value of Brazilian listed state-owned enterprises (SOEs), from 2002 to 2017, totaling 327 observations using an unbalanced panel data with fixed and random effects regressions. The evolution of corporate governance practices adopted by the boards is presented for this period, using a Board Structure Index (BSI). The results indicate a significant positive relation between the board's structure and firm performance, measured by ROE and ROA, and firm value, measured by Tobin's q. These findings are consistent with corporate governance literature, in the sense that the board's role of monitoring management reduces agency conflicts. The results also show an improvement in adopting corporate governance practice on Brazilian SOEs' boards over the last decade.

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