| Author | Fernando, A. Anil Jayantha |
| Call Number | AIT Thesis no.SM-02-11 |
| Subject(s) | Corporate governance Finance Sri Lanka
|
| Note | A thesis submitted in partial fulfillment of the requirements for the degree of Master of
Business Administration. |
| Publisher | Asian Institute of Technology |
| Abstract | The study was aimed to examine the existing corporate governance practice in Sri Lanka
and to investigate whether there was a relation between board structure and film value. The
CBP issued by the ICASL was taken as the conceptual framework of the study. Primaiy
data was gathered from questionnaire and accounting and other relevant data was
collected from annual reports of companies. The study covered 201 of 239 companies
listed in CSE as at the end of year 2001 leading to a sample size of 84%.
The study found that the size of the board of directors in Sri Lankan companies is fairly
large irrespective of the size of the company and ranged it from three to sixteen members
per board. The propo1tion of non-executive directors in the board was 22.96% of total
directors. It was empirically found that only 51 % companies had separated the office of
CEO from that of chairnrnn.
Further, it was found that directors of 90% of companies hold shares thought the
magnitude of holdings was not significant. Furthermore, CEOs interest in equity was found
to be 2.21 %, thus revealing a big distance between cash flow tights and control rights of a
company.
On the matter of setting up of committees, only 16% of companies had set up an audit
committee whereas remuneration committee and nomination committee had been largely
ignored. The average size of a committee was around three members and of them majority
was non-executive directors.
It was evident that large boards tend to be negatively conelated with Tobin's Q and EBIT
whilst there was a significant negative correlation between board size and net asset
turnover. Inclusion of higher number of non-executive directors in the board and separation
of office of CEO from that chairman also negatively correlated with value of firm.
Interestingly it was found that CEOs shareholding was positively related with firm's value
even though the relation cannot be regarded as significant.
Disclosures made in annual reports were in conformity with recommendations when it was
mandato1y to do so. All the other cases, level of disclosures made was not satisfactoty.
All in all it could be inferred from the study that, the atmosphere in relation to developing a
sound corporate governance framework in Sri Lanka is still in its preliminaty stage though
many steps are being taken parallel with changes in the world and rather it needs a big push
from socio-cultural developments in addition to the need of an effective institutional
framework to ensure the smooth function of corporate governance. |
| Year | 2002 |
| Type | Thesis |
| School | School of Management (SOM) |
| Department | Other Field of Studies (No Department) |
| Academic Program/FoS | Master of Business Administration (MBA) (Publication code=SM) |
| Chairperson(s) | N. Ramachandran |
| Examination Committee(s) | Tang, John C.S. ;S. Siengthai; Kobrak, Christopher |
| Scholarship Donor(s) | Asian Development Bank-Sri Lanka |
| Degree | Thesis (M.B.A.) - Asian Institute of Technology, 2002 |