Does Corporate Governance Enhance Financial Distress Prediction?

This study validates some aspects of agency theory, resource dependency and organization theory referring to the Sri Lankan context. The sample includes 205 non-financial listed firms prepared in a balanced panel for six years. Implications are provided insufficiency financial variables predicting corporate distress. Financial together with governance jointly enhance predictive power Less likelihood distress is explained by board size, independence, institutional ownership, non-institutional ownership concentration, ownership. Boards 5-9 members likely be optimal. Firms fail concentrated structure. expected monitoring role large shareholders blockholders inhibited their expropriation. expropriation could also occur unitary leadership. Contextually, results make distinctive contribution literature owing lack quality audits compliances, family dominance, erraticism. Moreover, control within business groups economic political instability portrayed.