Corporate Governance Practices and Capital Structure: A Case in Sri Lanka

  •  Sivapalan Achchuthan    
  •  Rajandran Kajananthan    
  •  Nadarajah Sivathaasan    


The purpose of the study is to find out the significant mean difference in the capital structure among thecorporate governance practices, and secondary objective of the study is to suggest the listed Manufacturingcompanies in the Sri Lankan context to adopt corporate governance practices towards the capital structure. Inthis view, Twenty eight manufacturing companies listed on Colombo Stock Exchange in Sri Lanka wereselected as sample size for the periods, 2009, 2010 and 2011. The one–way Anova (f-test) and independentsample t-test were used to find out the out the significant difference in capital structure among corporategovernance practices. Findings revealed that, Corporate Governance Practices contributes significantly toCapital Structure. Board Committee in the Corporate Governance Practices contributes significantly to CapitalStructure. And also Capital Structure is not contributed significantly by Board composition, Board Size, BoardMeeting, and Leadership Structure in Corporate Governance Practices. Meantime, there is no significantdifference in the capital structure in terms of leverage among corporate governance practices of the listedmanufacturing companies in Sri Lanka. Due to that, further study should focus on the determinants of capitalstructure in the listed manufacturing companies to take cues in the financial leverage of the particular companies.Further, suggestion was made that corporate governance rules should be strictly mandated by the Securities andExchange Commission of Sri Lanka. In addition, political, economic, technological and social & cultural aspectsof the Sri Lanka should be considered in the policy framework of the corporate governance.

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