Research Abstract of PhD
Level of Informativeness of Annual Reports and Corporate Governance,A Study of Sri Lankan Quoted Public Companies
The contemporary view is that both corporate disclosure and corporate governance play a key role in any economy with the advent of publicly traded (quoted) companies, which are characterized by a high degree of separation of ownership and control. However, there is a dearth of prior research evidence in relation to the corporate disclosure and corporate governance systems and practices in the Sri Lankan context. Hence, this study aims to fill this gap through a comprehensive evaluation of the disclosure and governance practices of Sri Lankan quoted public companies, the factors influencing these practices and the economic consequences of improved disclosure and governance practices. The study adopted a mixed methodology where a range of quantitative and qualitative techniques were used. The study finds that companies which show a high level of compliance to corporate governance best practices tend to provide a high level of corporate disclosure. However, there is a high degree of concentration in the high disclosure companies in terms of business groups and economic sectors to which they are belonging to. This also indicates a functional convergence in corporate governance practices in Sri Lankan companies. The study also finds that governance practices of Sri Lankan companies have both positive and negative features in terms of their compliance with corporate governance best practices. Both disclosure and governance practices of these companies are strongly influenced by the relevant regulatory and institutional frameworks in Sri Lanka developed in line with the Anglo-Saxon Model owing to both historical and economic reasons. Further, many company specific factors influence and shape the disclosure and governance practices of Sri Lankan companies and among these, the most notable factor is the ownership structure, which is highly concentrated with a presence of a controlling shareholder who would strongly influence both corporate disclosure and corporate governance practices. This revelation questions the validity of the Anglo-Saxon Model of Corporate Governance in the Sri Lankan context as the control and ownership is separated in Sri Lankan companies between the controlling shareholders and the minority shareholders not between the managers and the shareholders as assumed in this model. In spite, the study finds that capital market recognises the improvements in both corporate disclosure and corporate governance. Nevertheless, since Sri Lanka is still an emerging market, the extent of benefits of these improvements on the resource allocation in the capital market would depend on the institutional and structural context within which these companies operate.