Paper Title
Do Corporate Governance Variables Predict Corporate Failure: Evidence from An Emerging Economy

Abstract
The study aims to investigate the usefulness of corporate governance variables in predicting corporate failure of listed companies in Sri Lanka. Fifty-six matched pairs of failed and non-failed companies listed in the Colombo Stock Exchange in Sri Lanka over the period from 2008 to 2017 were used as the sample of the study. Logistic regression was employed to test the hypotheses of the study. Six corporate governance variables namely board size, CEO duality, outside directors, presence of audit committee, director’s remuneration, and foreign ownership were used for prediction of corporate failure.The results of the study reveal that CEO duality is positively related with the likelihood of corporate failure. This means that CEO duality is more practiced in the failed companies than in the non-failed companies. Results also indicate that outside director ratio and director remuneration have negative effects on the probability of corporate failure. It is therefore evident that increase of the outside directors and director remuneration lead to decrease the probability of corporate failure. However, other corporate governance variables such as board size, presence of audit committee and foreign ownership appear to be unrelated with the failure status. Results of this study can assist investors, managers, shareholders, financial institutions, auditors and regulatory agents in Sri Lanka and other countries to forecast corporate failure of listed companies in making decisions. Keywords–CEO duality; foreign ownership; Logistic regression; outside directors; Sri Lanka