Corporate governance practices and firm performance of listed companies in Sri Lanka

The purpose of this study was to examine the relationship between corporate governance practices and firm performance in Sri Lanka, as a result of the adoption of code of best practice on corporate governance in 2003 and the extent of changes to corporate governance practices four years after (2007). During this period, the firms that operated in Sri Lanka were affected by political and economic instability. However, the stock market performed well

The Impact of Corporate Governance on Firm Performance in an Unstable Economic and Political Environment: Evidence from Sri Lanka

Corporate governance is considered to have significant implications for the growth prospects of an economy. Good corporate governance practices are regarded as important in reducing risk for investors, attracting investment capital and improving the performance of companies. However, the way in which corporate governance is organized differs between countries, depending on their economic, political and social contexts. Thirty years of civil war in Sri Lanka ended in 2007. Given the severe impact of the war on the economy, it was expected that the capital market would have declined during this period. Such was not the case. In fact, share prices rose substantially. In 2003 the Government had introduced corporate governance guidelines for listed companies. This paper argues that there was a relationship between the corporate governance initiative and the growth in the performance of firms from 2003 to 2007. This study examined the relationship between corporate governance practices and firm performance. Data were obtained from the annual reports of a sample of 37 companies selected from the top 50 listed companies in The Lanka Monthly Digest 50 (LMD) for the years 2003 and 2007. The data were analysed using Spearman’s correlations and analysis of variance. This study confirmed a positive relationship between governance practices (separate leadership, board composition, board committee and firm performance) based on return on equity, and board composition, board committees and performance measured by Tobin’s Q. These relationships indicate that firms have implemented corporate governance strategies, which have resulted in higher profitability and share price performance

The Use of Internet Reporting for small business

Small business is receiving increasing attention from government because of its potential to drive innovation and economic growth in the wake of the global financial crisis. The lean governance structures in small business mean that decisions are quickly made and implemented. Multiple decisions can modify production processes, produce a new product, apply new marketing methods or tap new markets. These decisions are deeply connected with issues of technological capability and incentives to invest in new innovations. However, many small businesses are likely to have limited access to skills, and lack information about markets and technology. Knowledge about these issues in small businesses is often provided by their accountants. The purpose of this study was to determine how accountants could assist small businesses to make better use of emerging web based technologies to communicate with their accountants. The research was supported by a major grant from the National Institute of Accountants. This paper reports research in which twenty two accountants and their clients were interviewed to determine the potential adoption and use of web based information and communications technology to provide immediate on-going communication between small businesses and their accountants. It is the first article to investigate the support for and barriers to the use of interactive technology to promote small business via the web. The research questions addressed in this paper were: What uses do small businesses currently made of ICT? What are some of the new opportunities offered by ICT to accountants? What are the barriers to the use of new technology? What are the benefits to accountants and their small business clients?</jats:p