Contextual relativity of the role of accounting in corporate governance: evidence from the banking industry in Sri Lanka

Accounting and corporate governance failures have figured prominently in discussions of the possible causes of bankruptcy of financial institutions in recent times. These discussions suggest that accounting has failed to play an effective role in facilitating good governance of those organizations. Using Ekanayake et al. (2009), this paper argues that whilst accounting could assist corporate governance in banks, the effectiveness of its role in corporate governance is influenced by a number of contextual factors which are likely to vary between developing and industrialized countries. Based on the data gathered from a wide range of documents, and interviews of several key personnel related to the banking industry in a developing country, the paper reveals how the role of accounting in corporate governance in banks could be facilitated as well as obstructed by various factors in the environment.