1.1 by Public Listed Companies in Sri Lanka

 

1.1             
Research
background

A company is a
business unit. It contains a group of individuals and possessions who share a
common goal of making profits. This group is considered to be a legal person in
the law. A
single business or a joint venture, registration activities can be done within
14 days of commencement. However business cannot continue until a company
completes its registration process. Listed companies are called common stock
companies registered in the stock market. These companies are regularly known
as priced companies. Currently there are 295 listed firms in Sri Lanka.
The listed corporations are under 20 sectors.

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Agency Theory

This
is a theory based on a corporation’s possession and administration. Owners of
the company are its shareholders, and a company is administrated by a board of
directors. In the future, the directors will not turn for the benefit of the stakeholders.
The agency’s theory has been built to avert these circumstances. The agency
theory is a wide-ranging perception, and numeral concepts are required to comprehend
it.

 

Corporate Governance

Corporate Governance Practices adopted by Public
Listed Companies in Sri Lanka would be evaluated through this study. The
practice of Corporate Governance in Public Listed Companies could be recognized
as a mandatory requirement. Even though it is a mandatory requirement, the
quality of the practice may different from one firm another. Some companies may
practice it as it is a mandatory requirement. On the other hand some companies
may adopt the corporate governance code, not merely it is a mandatory
requirement. Those companies may practice it in order to increase the worth of
the shareholders. Therefore, the quality of the implemented corporate
governance practices may differ from one company to another. This study would scrutinize
the variances between of Corporate Governance practices.

 

Corporate Governance Concept was advanced on the Agents theory. Corporate
governance is a structure that controls and manages a business. Corporate
governance comprises equity in partnerships, managers, customers, suppliers,
financiers, governments, and communities.

This
will determine the company’s strategy for designing objectives and how to accomplish   those goals, the methods in which
performance is monitored. The preliminary definition indicates that the
company’s board of directors will pay attention to duties to achieve those
objectives. CG had worked to get the consideration of researchers.
It plays an important role in governing large scale frauds and corporate
crises.

 

Although
the company preserves the shareholders, its administration takes place through
a board of directors. Therefore, each company has a formal board of directors.
The character of the Board of Directors depicts the nature of
the board and the nature of
the directors. The directors of each firm are miscellaneous.

 

The panel size, the arrangement of the board, the Audit Committee
size, the arrangement of the Audit Committees, the CEO duality and the
number of the meetings was held
are used to recognize the nature of the board. The panel size
indicates the total number of directors in the firm. The panel of directors, which decides to make
decisions of a company, determines the board size (Mecklirrg, 2014 ). The number of administrators
in a company is between 5 and 13.
The number influenced by on the size of each company. Concurring
to Agency theory, minor board size is effective.

 

The
composition of the panel can be executive and non-executive Directors.
Non-executive directors can also be distinguished as independent and non-independent. Here, it appearances
at how many non-independent directors are from the whole director board (Kakanda, Salim, & Chandren , 2016). Independent
Directors denotes the number of directors exterior to the business. Their
confidentiality and reliability are more restricted to the outside. Hence the
independent non- executive directors are significant
when making decisions in a business. As some studies have indicated out, these
independent non-executive directors are more encouraging to business (Kakanda, Salim, & Chandren , 2016). According
to agency theory a majority of independent directors on the board enhance its
effectiveness & afford superior performance (Ghabayen,
2012).

 

The
Audit Team is a sub-committee of the panel of directors. The main roles of the
Audit team are to monitor the procedure of monetary reporting and disclosure,
monitor the accounting policies and principles, and monitor performance and impartiality.
A company must have a competent Audit Committee to be listed. It’s vital to
have a good audit team for a virtuous management process. The number of members
in the Audit team is the scope of the Audit Committee. Some studies indicate
that the size of the Audit Team is important to be lesser. The purpose is that
the organization is demanding in the presence of large associates (Ghabayen, 2012).

 

There
are independent and non-independent associates of an Audit team. This is known
as the arrangement of Audit Committees. Independent Auditors are parties
outside the corporate. That is, the parties who are not involved in the
management of the business. According to the agency theory, having independent
auditors is significant to the corporation.

 

In addition, the panel
appearances can be recognized by the CEO duality. If both the positions of the
chairman and the CEO of a corporation are held by one soul, it is baptized CEO duality.
In doing so, the soul shall provide assistance
and guidance to the panel of managements. It also works in the expansion and
implementation of strategy.

 

The impact of monetary
performance on Panel meetings is also examined here. A panel conducts meetings
with a corporation to discuss plans, tactics, policies, and other matters in a
company’s forthcoming plans. Also, panel meetings are held to deliberate the
performance of the corporation over the previous year. Here
look at how many conferences have been held annually
for this. Panel meetings are an important aspect that contributes to the
creation of vital decisions in a company.

 

These features can identify
the type of the board. Also uses the panel’s gender, experience and
qualifications to recognize the nature of directors. The Panel’s gender means
that the whole panel of directors consists of at least two women. 

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