IMPACT OF OWNER – BASED AND LENDER-BASED GOVERNANCE MACHANISM ON FIRM FINANCIAL PERFORMANCE OF LISTED COMPANIES IN SRI LANKA

Abstract

This study examines the impact of both Owner-based and Lender Based Governance mechanisms on the firm financial performance in terms of three aspects, namely Profitability, Firm Value, and Firm Survival. The study was done using quantitative research methods with a deductive approach. The Secondary data was collected sample consist of 50 listed companies in Sri Lanka for the period of Eight years from 2012 to 2019. The data were tested using Panel Data Regression. The results indicate that the Owner- Governance Mechanisms would enhance the firm value. The Lender Governance Mechanism significantly impacts firm profitability, firm value, and firm survival. However, the latter aids sustain the corporates, by attenuating firm distress level. In conclusion, the two types of corporate financiers have got divergent expectations which they try to assure through their own governance mechanisms. The latter helps, however, support the companies, by attenuating the level of firm distress. In conclusion, the two types of corporate financiers have divergent standards that they try to guarantee over the organization (investor) by their own governance structures, as evidenced by various effects on three aspects of corporate financial efficiency. Therefore, both structures of governance must be regarded as relevant Factors in assessing the various types of the financial success of companies.