Abstract:
This paper examines the moderating effects of CEO leadership and board monitoring on the relationship
between frequency of board meetings and firm performance. Analytical results based on a sample collected
from 212 publicly-listed companies in the Colombo Stock Exchange in Sri Lanka show that frequency of
board meetings exerts a positive effect on firm performance. More importantly, consistent with the
proposition of agency theory, CEO’s excessive leadership power shows a negative moderating effect while,
out of our prediction, CEO duality reveals a positive moderating effect, supporting the stewardship
perspective. Moreover, board ownership plays a positive moderating role. The research contributes
corporate governance literature by identifying CEO leadership and board monitoring as critical moderating
mechanisms and thus explicate the inconclusive relationship between board activities and firm
performance. By examining the governance issues in an Asian developing economy, our study also provides
a critical step toward deeper understanding of managerial contexts where the power dynamics between CEO
and board of directors would be largely different from those in Western countries.
