Corporate Governance, Ownership Type and Corporate Performance in Emerging Economies: Empirical Evidence from Sri Lanka

Abstract

This study examines the relationship between firm performance and ownership type and also the relationship between firm performance and corporate governance. In addition this study investigates whether there is a link between performance measures. Although many researchers have made an effort to investigate whether there is a link between ownership type and organizational performance, corporate governance and corporate performance in developed countries, the empirical evidence on these areas are weak in Sri Lanka, being a developing country and emerging economy with a unique economic situation. Another aspect of corporate performance studies are some potentially important biases related to the selection of the performance measures used in studies on corporate performance. This is due to many researchers having chosen only one or two measurement techniques out of financial/accounting, market based and production efficiency measurement techniques to measure corporate performance. Therefore different conclusions can be achieved using one or the other measures of empirical evidence. Consequently the validity of results of many studies on corporate performance in the literature is questioned (Bozec, Dia, & Breton, 2006). To overcome this problem, multi-dimensional measures are required (Carton & Hofer, 2006). Accordingly, three dimensions of performance measures (financial/accounting, market based and production efficiency) were used in this study. These performance measurement techniques have been compared to determine whether there are potential relationships among them. This study makes four significant contributions to the study of the performance of - public, private and mixed enterprises in Sri Lanka, especially via multiple approaches to address the research issue of corporate performance.