Abstract:
Purpose: There have been plenty of studies on the link between board
attributes and company financial performance, nevertheless, none of them
have particularly explored the moderating influence of the firm size in this
nexus in terms of the developing nation Sri Lanka. Therefore, the objective
of this research is to examine the moderating effect of firm size on the
relationship between board attributes and the financial performance of
listed companies in Sri Lanka.
Design/Methodology/Approach: Return on Assets (ROA) is utilised to
evaluate the firm performance, while board attributes include board size,
independence and board meetings. This study utilises panel data from 100
non-financial listed firms in Sri Lanka to investigate the relationship during
the period spanning from 2019 to 2023.
Findings: The Hausman test and Breusch and Pagan Lagrangian multiplier
test indicate that the random effect model is more favorable than the fixed
effects model or pooled ordinary least squares regression model. The
results of random effect model demonstrate that the inclusion of firm size
as a moderating variable has solely had a negative impact on the link
between board size and ROA. The presence of firm size does not
significantly affect the relationship between board independence and
meeting and ROA.
Research limitations: The study exclusively examined reports from a five-
year period for certain non-financial companies listed on the CSE in order
to assess the study objective. This study only considers the board attributes
in governance structures such as board independence, board size and board
meeting and also ROA used to measure the performance.
Implications: This study contributes empirical evidence to the
insufficiently studied association between board attributes and financial performance as moderated by firm size. Further, this study's results are to
support managers of the firm, legislators, and regulators in determining the
board characteristics and the firm size of the business.
