Interlocking Directorate and Firm Performance of Listed Companies in Sri Lanka Farwis M.1, Nazar M.C.A.2 1Assistant Lecturer, Department of Accountancy, Sri Lanka Institute of Advanced Technological Education, Sammanthurai, farwism@gmail.com 2Senior Lecturer, Department of Accountancy and Finance, Faculty of Management and Commerce, South Eastern University of Sri Lanka, Sri Lanka, mcanazar@seu.ac.lk Online published on 2 April, 2019. Abstract Purpose The purpose of this paper is to investigate the relationship between director interlock and firm performance in Sri Lanka. The author posits that directors gain experiences due to director interlocking which enables them to contribute to the firm performance. On the other hand, busyness of directors due to director interlock destructs the firm performance along with board characteristics. Design/Methodology/Approach Secondary data were obtained from published audited annual reports of 156 companies listed in Colombo Stock Exchange for the period of 2010 to 2017. Ordinary Least squares regression model was used to examine the relationship between director interlocking and firm performance. Findings Empirically, it was found that there is a significant negative association between directors interlocking and firm performance. Further, it was found that, Board size, CEO duality and NED significantly negatively associate with firm performance. The result evidences that NED mere participation on corporate boards within the company would not enhance firm performance. Originality/Value Prior several studies in this nature were performed with develop country data set where this study was emerging market perspective. It may the initial study in Sri Lankan perspective and it could be a tools for evaluate the firm performance. Top Keywords Director Interlock, Firm Performance, Corporate Governance, Sri Lanka. Top |