Listed Companies in Sri Lanka

The whole number of listed companies in Sri Lanka is 295. These firms have registered below 20 business sectors. Of these, in the 2016 the top ten are ahead of the top ten by john keells holding, commercial bank, mas holding, Dialog Axiata, Harleys, Aitken spence, Uniliever, Cargills, Hemas and Sampath bank. Even though these companies are best companies, even in the 14th year of comparison, some companies have shown profits compared to the previous year, while other companies have lost their losses.

Governance Structure of Companies

Although the rights of a company are owned by stockholders, its governance is done through a board of directors. The duty of the directors is to certify that the stockholders” value the profits. There was a question that these companies were influenced by the nature of the board or the nature of the directors of the companies to profit and loss. This research is a solution to the problem of the nature of the board or the characteristics of the directors as having a direct impact on the financial performances.

Impact of Financial Performance on Company Reputation

If a company continues to lose, it is not good for the corporation. As a result, customers reduce the consumption of goods and services to the brand, resulting in a decrease in the superiority of goods and services produced by the company. They lose confidence in those brands. And if companies continue to suffer losses, employees cannot pay their wages on time. Therefore, there will be clutter of employees. These issues have arisen. The economy also has an unfavorable situation. Therefore, it is important for the institutions to avoid losses.

Challenges Due to Agency Theory

According to the agency theory, the forthcoming directors will not performance for the good of the bondholders. Therefore, companies have to deal with a variety of difficulties. This leads to disagreements between holders and managements. It also reasons the firm to misplace its reputation. It is important to study how this affects the features of the director to maximize the return margin of a business.Also, the basic explanation of corporate governance attentions on the responsibilities and duties of the Panel of Directors to achieve the company’s purposes. The main intention of any company is to extremes returns. It is significant to know how the Board contributes to this.

Research Gaps in Corporate Governance Studies

Furthermore the number of research projects in Sri Lanka correlated to board characteristics and financial performance is low. It is intended to do this research as a solution. Also, still there is no clear relationship between the board characteristics and the financial performance.