Abstract:
The poor performance of commercial organizations is frequently attributed to the absence
of effective corporate governance. Developed economies with a strong private sector and
well-established corporate governance systems consistently post high and steady growth
rates. The main purpose of this study is to explore the effect of corporate governance
mechanisms on a firm's Return of listed companies in CSE. Data collection was carried out
on the 208 companies during the period 2015 to 2020. Size of the board, Board
composition, Chief Executive Duality, and Institutional ownership were taken as the
explanatory measures and ROA was taken as a proxy of corporate profitability.
Furthermore, firm size, and firm age and Debt to Equity Ratio were taken as control
measures. To explore the effect of governance mechanisms on a firm's Return, panel data
regression was applied. According to the results of the panel data analysis, Board size,
Board composition, and firm size have a significant impact on the profitability of the listed
companies in Sri Lanka. Moreover, institutional ownership and CEO duality have no impact
on Return on Assets. In the normality test, the p-value of the Jarque–Bera value for all
models is found to be greater than 0.05. This satisfies the point that the residual has the
normality. The findings of this research are vital for policy implications in Sri Lanka.
