Corporate Governance Reforms in Sri Lanka

Abstract

Over the last two decades corporate governance practices have gained increased attention mainly owing to the questionable business practices and corporate scandals that had taken place globally. This made introduction of corporate governance reforms a high priority in most countries in the world. In this context, the objective of this study is to examine how corporate governance reforms have taken place in Sri Lanka, their salient characteristics and their implications on the corporate sector. This study had been carried out as an exploratory study of corporate governance reforms introduced from 1997 to 2008, the period in which the main reforms had taken place in the country. These reforms have been carried out in Sri Lanka via the introduction of codes of best practices on corporate governance, which advocate core corporate governance perspectives such as improvement of accountability, integrity, efficiency, and transparency that the companies should follow to ensure their sustainability. A common feature of these reforms is their close allegiance to the Anglo-Saxon Model of Corporate Governance, which enjoys hegemony in corporate governance reforms around the globe. However, this model is in conflict with some key features of corporate sector in Sri Lanka particularly with the concentrated corporate ownership structure. This shows that the main issue that stems from Anglo-Saxon Model based corporate governance reforms in Sri Lanka is the gap between the homogeneous corporate governance best practices and the heterogeneous nature of societies and institutions in which these reforms are being implemented. Thus, it is questionable whether corporate governance reforms introduced in Sri Lanka could play a crucial role in sustaining a business.

Keywords: Anglo-Saxon; Corporate Governance; Ownership; Political Economy; Reforms

DOI: http://dx.doi.org/10.4038/sljass.v1i1.3813

Sri Lanka Journal of Advanced Social Studies Vol.1(1) 2011 1-25