A company is one of
the business entities. It involves a group of individuals and possessions, who
share a common goal of making profits. This group is considered to be a legal
person in the law. If
a single business or a joint venture, registration activities can be done
within 14 days of commencement. But business cannot continue until a company
completes its registration process. Listed companies are called common stock
companies registered in the stock market. Often these companies are known as
priced companies. Currently there are 295 listed companies in Sri
Lanka. The listed companies are under 20 sectors.
is a theory based on a company’s ownership and management. Owners of the
company are its stakeholders, and a company is governed by a board of
directors. In the future, the Directors will not act for the benefit of the
shareholders. The agency’s theory has been built to prevent this. The agency
theory is a broad concept, and a number of concepts are needed to understand it.
evaluation of Corporate Governance Practices adopted by Public Listed Companies
in Sri Lanka would be done through this study. The practice of Corporate
Governance in Public Listed Companies could be identified as a mandatory requirement.
Even though it is a mandatory requirement, the quality of the practice may
different from one company another. Some companies may practice it as it is a
mandatory requirement. On the other hand some companies may adopt the corporate
governance code, not merely it is a mandatory requirement. Those companies may
practice it, in order to increase the value to the shareholders. Therefore, the
quality of the corporate governance practices adopted may differ from one
company to another. This study would examine the differences between of
Corporate Governance practices.
Corporate Governance Concept was developed on the Agents theory. Corporate
governance is a system that controls and manages a company. Corporate
governance includes equity in partnerships, managers, customers, suppliers,
financiers, governments, and communities.
will determine the company’s strategy for designing objectives and how to
achieve these goals, the ways in which performance is monitored. The
preliminary definition indicates that the company’s board of directors will pay
attention to duties to achieve those objectives. CG had worked to get the
attention of researchers. It plays an important role in controlling large scale
frauds and corporate crises.
the company owns the shareholders, its administration takes place through a
board of directors. Therefore, each company has a formal board of directors.
The character of the Board of Directors here means the nature of
the board and the nature of
the directors. The directors of each firm are diverse.
The board size, the composition of the Board, the Audit Committee
size, the composition of the Audit Committees, the CEO duality and the
number of the meetings was held
are used to identify the nature of the board. Board size
means the total number of directors in the company. The Board of Directors, which decides to make
decisions of a company, determines the board size (Mecklirrg, 2014 ). The number of
directors in a company is between 5 and 13.The
number depends on the size of each company. According to Agency theory, smaller
board size is effective.
composition of the board can be executive and non-executive Directors.
Non-executive directors can also be divided into two categories as independent and non-independent. Here, it looks at
how many non-independent directors are from the whole director board (Kakanda, Salim, & Chandren , 2016). Independent
Directors mean the number of directors outside the business. Their
confidentiality and reliability are more confined to the outside. Therefore the
independent non- executive directors are important
when making decisions in a company. As some studies have pointed out, these
independent non-executive directors are more favorable to business (Kakanda, Salim, & Chandren , 2016). According to agency
theory a majority of independent directors on the board enhance its effective
& provide superior performance (Ghabayen, 2012).
Audit Committee is a sub-committee of the Board of Directors. The main
functions of the Audit Committee are to monitor the process of financial
reporting and disclosure, monitor the accounting policies and principles, and
monitor performance and independence. A company must have a qualified Audit
Committee to be listed. It’s important to have a good audit committee for a
good management process. The number of members in the Audit Committee is the
size of the Audit Committee. Some studies indicate that the size of the Audit
Committee is small in important. The reason is that the coordination is
difficult in the presence of large members (Ghabayen, 2012).
are independent and non-independent members of an Audit Committee. This is
known as the composition of Audit Committees. Independent Auditors are parties
outside the business. That is, the parties who are not involved in the
management of the business. According to the agency theory, having independent
auditors is important to the company.
In addition, the
board characteristics can be identified by the CEO duality. If both the
positions of the chairman and the CEO of a company are held by one person, it
is called CEO duality.
In doing so, the person shall
provide assistance and advice to the board of directors. It also works in the
development and implementation of strategy.
The impact of
financial performance on Board meetings is also examined here. A Board conducts
meetings with a company to discuss plans, strategies, and other issues in a
company’s future plans. Also, Board meetings are held to discuss the
performance of the company over the past year. Here look at how many meetings have been held annually for
this. Board meetings are an important factor that contributes to the creation
of important decisions in a company.
These factors can
identify the type of the board. Also uses the board’s gender, experience and
qualifications to identify the nature of directors. The Panel’s gender means
that the whole Board of directors consists of at least two women.
The entire directorate consists of some of the listed companies among the male
parties. Other companies have female representations. This study examines how
the financial performance of a company is affected to this.