Title:
COMPLIANCE OF CORPORATE GOVERNANCE BEST PRACTICE CODE BY THE COMPANIES LISTED ON THE COLOMBO STOCK EXCHANGE

Authors:
D. Ruwan Lakjeewa Fernando, Sri Lanka

Abstract:

Good Corporate Governance practices are regarded as important in reducing risk for investors, attracting investment capital, and improving the performance of companies. The purpose of this study was to assess the level of compliance with Corporate Governance best practices through the development of the Sri Lankan Corporate Governance Index. The level of compliance with Corporate Governance practices was assessed based on the Corporate Governance Index developed on secondary data. Several aspects related to Corporate Governance, including the board of directors; chairman and chief executive officer; board balance and appraisal of performance; disclosure of remuneration of directors; shareholders; accountability and audit; institutional investors and other investors, and disclosure of sustainability reporting were examined to develop the Corporate Governance Index and the data were gathered from a sample of 96 publicly listed firms in 19 industries in the Colombo Stock Exchange in Sri Lanka. The overall level of compliance on Corporate Governance score was 69.34 by the Sri Lankan listed firms. Based on the one standard deviation score value of 10.93, the mean value of 64.49 was identified and 17 listed firms were identified below this level and 18 listed firms were identified as higher than this level. This study makes an original contribution to corporate governance literature by examining the level of compliance with Corporate Governance best practices in a developing country, namely Sri Lanka.