Corporate Governance and Firm Performance of Listed Firms in Sri Lanka

The aim of this study is to examine the relationship between corporate governance structures and firm performance of listed firms on Colombo Stock Exchange (CSE) in Sri Lanka. Data were collected from 174 firms in the financial year 2010 and multiple regression analysis were used to examine whether the existing corporate governance mechanisms influence the firm performance of listed firms in Sri Lanka. The study found evidence that, (i) board size and proportion of non- executive directors in the board shows a marginal negative relationship with firm value, (ii) proportion of non-executive directors in a board and financial performance of firm shows negative relation contrary to the findings of previous studies. The firm size and director shareholdings have a significant impact on firm performance of listed firms in Sri Lanka.