Do Board Composition and Member Dynamics Influence Profitability? Evidence from the Capital Goods Sector in Sri Lanka

This study examines how board composition and member dynamics influence profitability among listed companies in Sri Lanka's capital goods sector. This sector, characterised by high-stakes decisions involving machinery, equipment, and infrastructure investments, demands important board-level decision-making that significantly impacts a company's operational capacity and financial performance. By examining main board characteristics, including board size, proportion of independent directors, educational background, and gender diversity, from 2015-2023, the study sheds light on the governance factors shaping long-term financial outcomes. Findings suggest that a higher proportion of independent directors improves company performance, while larger board size negatively impacts profitability. In addition, boards with higher female representation correlate with lower profitability, which implies that structural barriers may limit the effectiveness of female board participation.