Corporate governance and financial performance: case study of selected manufacturing companies in Sri Lanka

Manufacturing companies serve as the backbone of the economy. The segment provides support, not only for the economic development of the country by showing positive trends towards the sectorial growth, but also serves as a steering wheel for all of the sectors. It is possible that corporate governanceis important in manufacturing companies due to the nature of business and the effect of government regulations, both of which limit managerial discretion. This study examines the relation between corporate governance and financial performance among selected manufacturing companies in Sri Lanka. The paper covered selected manufacturing companies in Sri Lanka over a period of past 5 years from 2008 to 2012. Correlation and regression analysis were used in the analysis. This paper found that CEO duality is significantly correlated with ROA and also BI is significantly correlated with NPV at 1 percent significance level. Other variable is not correlated with any financial performance factors.