Impact of Board Structure Characteristics on the Earnings Quality: Evidence from Licensed Commercial Banks Listed in Colombo Stock Exchange

Abstract

The issues with board structure characteristics have probably been identified as the most significant one among all the financial management issues. The Board Structure always aids a business concern in gaining Earnings Quality, Vitality, and Life Strength, which explains why. An effective Board Structure is anticipated to have a positive impact on the development of Earnings Quality. The impact of board structure characteristics on the earnings quality of commercial banks in Sri Lanka is the main topic of this study. Ten licensed commercial banks that are listed on the Colombo Stock Exchange in Sri Lanka were the subject of the study, which used the years 2015 to 2021 as its sample period. The balance sheet method was used to gauge the quality of the earnings. Board Size, Received: 25/08/2023 Board Composition, and Board Meeting have been chosen by the study as being Revised: 07/03/2024 Accepted: 18/03/2024 representative of the board structure characteristics. Firm Size, Profitability, and Published: 10/10/2024 Liquidity are the study’s-controlled variables. The study used descriptive and multiple regression analysis to examine the association between the variables of the two financial aspects of the selected Licensed Commercial Banks Listed in the Colombo Stock Exchange's Annual Reports. The results reveal that Board Meeting has a positive and significant impact on the Earnings Quality of Licensed Commercial Banks While Board Size and Board Composition have no significant impact on the Earnings Quality of Licensed Commercial Banks. Among the selected controlling variables, Profitability has a significant and positive impact on the Earnings Quality of Licensed Commercial Banks while firm size and liquidity have no significant impact on the Earning Quality of Licensed Commercial Banks.