Compliance of Listed Companies with Codes of Corporate Governance and Impact on Corporate Performance: Evidence from Sri Lanka

Dissanayake, Hiranya; Dissabandara, D.B.P.H.; Ajward, A.R.

doi:10.1007/978-3-030-62171-1_23

Cited by 5 publications

(4 citation statements)

References 74 publications

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“…According to Zabri et al (2016), publicly traded firms in Malaysia have a comparably greater degree of accrual-based earnings management, with a mean value of 0.165, which is relatively high. On the contrary, the lower value observed in this study in the Sri Lankan context could be attributed to the fact that local firms are subject to a higher level of regulatory scrutiny, and that the majority of the firms' financial statements are audited by Big-4 audit firms, which limits managers' discretion and lowers the degree of accrual-based earnings management in the Sri Lankan context (Dissanayake and Ajward, 2019). However, this study's findings indicate that earnings manipulation in terms of real activities (RAEM i,t ) is 8.999 (mean).…”

Section: Discussioncontrasting

confidence: 74%

“…CSR is concerned with ethical and moral issues related to corporate decision-making and behaviour, and addresses the complex problems of environmental safeguards, better human resource management, workplace health and safety, local community relations and customer-supplier relationships (Chapple and Moon, 2005). Prior et al (2008) emphasize that CSR activities not only increase stakeholder support but also improve company performance, which is also demonstrated by Dissanayake and Ajward (2019) in an emerging market context. However, using an ethical phenomenon, such as CSR initiatives, for an unethical purpose causes noticeable problems for the firms, which reduces value of these firms in the long term.…”

Section: Introductionmentioning

confidence: 99%

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Whether corporate social responsibility is used to suppress earnings management practices and could corporate governance mechanisms prevent them? An empirical study

Dissanayake

Ajward

Dissanayake³

2023

AJAR

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PurposeThis study examines whether managers adopt corporate social responsibility (CSR) disclosures to suppress earnings management practices and whether corporate governance mechanisms could limit such practices.Design/methodology/approachA quantitative approach was followed, in which secondary data from listed firms from 2014 to 2019 were gathered. Descriptive statistics and inferential techniques were performed, which included correlation, ordered logistic regression and 2SLS panel regression analyses.FindingsThe findings indicate that firms use CSR disclosure to conceal managers' opportunistic behaviour via earnings management as an entrenchment strategy and that corporate governance mechanisms could significantly constrain such behaviour.Research limitations/implicationsThis study goes beyond the conventional agency theory by incorporating additional theoretical perspectives from stakeholder and legitimacy theories, resulting in a multi-theoretical perspective in conceptualizing the study.Practical implicationsThe findings are expected to have significant policy implications, especially in limiting the opportunistic use of CSR disclosures and reducing earnings management practices to safeguard stakeholders' interests and ensure the sustainability of business entities.Originality/valueThe levels of CSR and board governance practices are captured using comprehensive indices. Moreover, earnings management was operationalized using both accrual-based and real earnings management proxies. Furthermore, while addressing an empirical dearth noted, the findings provide significant policy implications for limiting managers' opportunistic and unethical use of CSR disclosures with corporate governance mechanisms.

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Section: Discussioncontrasting

confidence: 74%

Section: Introductionmentioning

confidence: 99%

Whether corporate social responsibility is used to suppress earnings management practices and could corporate governance mechanisms prevent them? An empirical study

Dissanayake

Ajward

Dissanayake³

2023

AJAR

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“…Good corporate governance is a crucial factor in determining a company's performance, as poor governance, according to Li et al (2020), can result in business failure. Other studies, such as Abebe Zelalem et al (2022), Dissanayake et al (2021), Gupta and Sharma (2014), Shao (2019), and Zheka (2005) have also confirmed the positive correlation between good corporate governance and company performance. According to Gregory and Simms (1999), effective corporate governance involves protecting a company's creativity, flexibility, and freedom, and ensuring its ability to generate wealth and prosperity for civil society.…”

Section: Introductionmentioning

confidence: 54%

Adoption of corporate governance principles in the wake of the Covid-19 pandemic: The case of Slovakia

Musová

Musa

Rech

et al. 2023

Journal of International Studies

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During periods of uncertainty, such as the Covid-19 pandemic, the significance of Corporate Governance (CG) practices is highlighted. The study aims to evaluate the adoption of CG practices in companies listed on the Slovak capital market, with a specific focus on the impact of the Covid-19 pandemic. The data were collected manually from the annual reports of these companies, and covered the period from 2016 to 2021. The Corporate Governance Index, which is developed through Saaty's method, is used to evaluate the overall level of CG implementation. Individual components of the CG Index are also examined. Between 2016 and 2021, the majority of the examined CG criteria and the overall CG Index showed improvement as compared to 2011 - 2015. However, currently, nearly 50% of companies do not disclose information on corporate governance, remuneration, and risk management, and many companies have not succeeded in establishing nomination and remuneration committees or making any progress in terms of board gender diversity. The Covid-19 pandemic has had a moderate impact on some criteria. On the one hand, the information on board member remuneration and risk management has moderately deteriorated. On the other hand, the audit committee has shown improvement. Nevertheless, the pandemic has not significantly affected the overall adoption of CG practices in Slovak companies.

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“…The population related to the research is the Listed Companies of Sri Lanka. (Dissanayake et al, 2021;Kang et al, 2007;Melovic et al, 2019). Therefore, the sample contains 50 companies with the highest market capitalization when questionnaires are distributed to two employees in each company, one from the accounts division and another non-accounts division employee.…”

Section: Methodology Research Approachmentioning

confidence: 99%

Employees' Perceptions on Corporate Governance: Empirical Evidence from Sri Lanka

2021

Self Cite

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In this study, the primary objective is to investigate employees' perceptions toward the corporate governance practices of Sri Lankan publicly traded companies. The objectives are based on the research problem and emerge through various aspects of corporate governance; components, performance implications, significant issues related to Directors, major issues affected for the company's well-being, and the current status in Sri Lankan Corporate Governance. The quantitative research approach is adopted, and primary data is gathered using a questionnaire survey with a sample of 100 respondents. The questionnaire is addressed to employees in the companies listed in the Colombo Stock Exchange, where the sample was constructed out of the top 50 companies of the highest market capitalization. The analysis is done through a validity using factor analysis and reliability test followed by an analysis of variance (ANOVA) test and chi-square analysis. The results show that employees' perceptions of corporate governance factors differ concerning the changes in the demographical factors. The results generated through this study can be beneficial for employees, managers, practitioners, and students in developing a better understanding of employee perceptions and the concept of corporate governance. Furthermore, this research constructs a scale for measuring employee perceptions of corporate governance, which has significant theoretical and practical implications.

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Compliance of Listed Companies with Codes of Corporate Governance and Impact on Corporate Performance: Evidence from Sri Lanka

Cited by 5 publications

References 74 publications

Whether corporate social responsibility is used to suppress earnings management practices and could corporate governance mechanisms prevent them? An empirical study

Whether corporate social responsibility is used to suppress earnings management practices and could corporate governance mechanisms prevent them? An empirical study

Adoption of corporate governance principles in the wake of the Covid-19 pandemic: The case of Slovakia

Employees' Perceptions on Corporate Governance: Empirical Evidence from Sri Lanka

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