Abstract:
Board plays a vital role and the directions of the entity’s whole journey lies with the hands and
brains of directors. This study focuses on investigating whether there is significant impact of
board composition on risk management of an entity. Cluster sampling method was employed
and 100 companies which are listed in Colombo Stock Exchange (CSE) have been randomly
selected so as to represent the all sectors in CSE. Data was collected from 2012 to 2017 by
annual reports. Board size, Board Independence, Board Financial Literacy, CEO duality and
Board meetings frequency were used as independent variables. Risk management was
considered as dependent variable while capital structure and company size were considered as
control variables. Risk management was measured by beta value. Regression analysis were
employed to analyze data. Findings revealed that there is a significant impact of Board
Financial Literacy and CEO Duality on beta. The findings will be vital in backing companies
to picking heads into its board
