Abstract:
Due to Sri Lanka's severe economic crisis, the majority of its businesses have recently struggled to
achieve remarkable performance. Therefore, it is essential to comprehend the characteristics that
support the performance of the corporate sector in the difficult business climate. Several research
have examined the association between board characteristics and the performance of the firm,
nevertheless, none of them have particularly explored the moderating impact of the managerial
ownership structure of the material companies in this nexus. In light of this, this study examines
how managerial ownership structure impacts the association between board characteristics and the
performance of Sri Lankan listed material companies. Return on assets is utilised to evaluate the
firm performance, while board characteristics include board size, independence, gender diversity,
and CEO duality. This study selects eighteen listed material companies in Sri Lanka as the sample
for the research, covering the period from 2018 to 2022, depending on the availability of data. Panel
data regression was employed to assess the key findings. As per the result of Hausman test panel
least squares method with the random effect model is favoured over the fixed effect model. The
notable findings demonstrate that material companies' firm performance is significantly and
negatively correlated with board size and independence. The gender diversity on boards
significantly improves the firm performance. CEO duality, nevertheless, does not have an influence
on the company's performance. The managerial ownership structure moderates the association
between the size of the board and the financial success of material corporations. By moderating the
impact of managerial ownership structure, other variables, however, are discovered to have
insignificant effects on the firm performance. This research adds to the existing literature and
theories such as agency theory, and stakeholder theory by providing new insights and shows the
moderating role of ownership structure on the impact of board characteristics on the firm
performance of Material companies. Further, this study's results are to support managers of the firm,
legislators, and regulators in determining the characteristics of the board and the ownership
structure of the business.
