Abstract:
Many studies carried out to investigate the link between board characteristics and firm performance in
developed countries. The empirical evidence on this area is very thin in Sri Lanka being a developing country.
Hence this study was undertaken with the intension of fulfilling the gap. The study examines the impact of
board characteristics on firm performance of Sri Lankan listed companies. This study employs a cross sectional
analysis of 116 firms as sample of listed companies in Colombo Stock Exchange for the financial year ending
2013 and multivariate analyses are used to test the proposed hypotheses. The board characteristics variables
being the independent variables and firm performance variable being the dependent variable are tested under
regression model. The results of the study show that board size and CEO duality are significantly negatively
associated with ROA. The study also documents that board independence is negatively related with ROA and
director ownership is positively related with ROA but both are not significant. Furthermore, control variables of
firm size and dividend yield are significantly positively linked with ROA and leverage is negatively related with
ROA though not significant. The findings of the study indicate mixed results which are in consistent with
empirical evidence of developed nation.
