Impact of Board Structure Characteristics on Financial Performance: Evidence from Selected Listed Companies in Colombo Stock Exchange

This study examines the impact of board structure characteristics on financial performance and the contribution of the code of best practices on corporate governance in determining board effectiveness. This study investigates whether board structure characteristics impact financial performance, as measured by Earning Per Share (EPS) and Return on Assets (ROA). Independent variables are board size, Board Meetings, Board Composition, Independent Board Committees, and Board Shareholding. Fifty companies listed in Colombo Stock Exchange (CSE) from 16 sectors were selected as sample size based on the turnover of the year 2019 for the period of 2017 to 2019. The data were analyzed using descriptive statistics, correlation analysis, and multiple regression analysis. According to the data analysis findings, this study found that the board structure characteristics significantly affect EPS and do not affect ROA. Findings also revealed that board size, board composition, board shareholdings indicators significantly impact EPS and board composition, and board shareholdings negatively affect the EPS. This study has provided useful information mainly to the PLCs in Sri Lanka in terms of the importance of compliance with the code of best practice on corporate governance toward enhancing board structure characteristics.