This study investigates the emergence of corporate governance reforms in emerging markets largely in line with the Anglo-Saxon Model of Corporate Governance using Sri Lanka as a case. Accordingly the objectives of the study are two-fold: the examination of Sri Lankan listed companies’ compliance with the Anglo-Saxon Model and the assessment of the issues involved in the application of this model in the Sri Lankan context. The level of compliance was examined via the corporate governance index developed in the study based on the Anglo-Saxon Model. Thereafter, the firm-level evidence on the level of compliance was analyzed descriptively by drawing inferences from the extant literature. The study finds an improvement in the leverage level of compliance of Sri Lankan listed companies over the years with the AngloSaxon Model. However, there is a considerable gap between this average level and the maximum possible level of compliance mainly owing to the significantly low level of compliance of Sri Lankan companies with the provisions on appointment, independence and determination of remuneration of directors. This low compliance is associated with the concentrated ownership structure of Sri Lankan listed companies with the presence of a controlling shareholder, which is a violation of the basic assumption of the Anglo-Saxon Model that the ownership of publicly held entities is widely held. Hence, the strong influence of the controlling shareholder on the governance structure is the main issue involved with the application of Anglo-Saxon Model in the Sri Lankan context. However, this is a common phenomenon in most emerging markets, which in turn has much deeper roots involving economic, social, cultural, legal and political factors. This shows that the context within which companies operate has significant implications on the corporate governance practices. Hence, these context speci*c issues should be given a serious consideration in future corporate governance reforms in Sri Lanka.
Keywords: Anglo-Saxon Model, Corporate Governance, Sri Lanka
For full paper: firstname.lastname@example.org
Department of Accounting, Faculty of Management Studies & Commerce University of Sri Jayewardenepura Nugegoda