Corporate governance and firm performance a study of selected listed companies in sri lanka

Abstract

Corporate governance is considered as the significant implications for the growth of an economy. Good corporate governance practices are important in reducing risk for investors, attracting investment capital and improving the performance of companies. Good corporate governance plays a vital role in enhancing performance of companies. Board structure and corporate report are used to measure the corporate governance whereas returns on assets, return on equity and net profit are used to measure the firm’s performance. The data of ten manufacturing companies in Sri Lanka representing the period of 2006 to 2010 were used for the study. The multiple regression analysis was applied to test the impact of corporate governance on firm performance. The results show that there is an impact of corporate governance on ROE and ROA. However the impact of corporate structure on ROE and ROA is higher than the board structure while the impact of board structure on net profit is higher than the corporate reporting. Further the study found a positive relationship between the variables of corporate governance and firm’s performance.