Accountancy
Permanent URI for this collectionhttp://repository.kln.ac.lk/handle/123456789/214
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Item Predicting corporate failure of listed companies in Sri Lanka(2012) Lakshan, A.M.I.; Wijekoon, N.The purpose of this research is to develop a model to predict corporate failure of listed companies in Sri Lanka. This study utilized publicly available data from annual repots of a sample of 70 failed firms and a sample of matched 70 non failed firms listed on Colombo stock market for a period covering the 2002 to 2008 financial years with logistic regression analysis. A total of seven corporate governance variables were used as predictor variables of corporate failure. Analysis of the statistical testing results indicated that Model consists with corporate governance variables improved the prediction accuracy to reach 82.86% one year prior to failure. Furthermore, predictive accuracy of the Model in all three years prior to failure is above 73%. Hence model is robust in obtaining accurate results for up to three years prior to failure. Final model includes four corporate governance variables, outside director ratio, CEO duality, remuneration of board of directors and company audit committee. These variables are having more explanatory power to predict corporate failure. Therefore, model developed in this study can assist investors, managers, shareholders, financial institutions, auditors and regulatory agents in Sri Lanka to forecast corporate failure of listed companies.Item Corporate governance and corporate failure(2012) Lakshan, A.M.I.; Wijekoon, N.The purpose of this research is to examine the influence of corporate governance characteristics on the corporate failure of listed companies in Sri Lanka. This study utilized publicly available data from annual reports of a sample of 70 failed firms and a sample of matched 70 non failed firms listed on Colombo stock market for a period covering the 2002 to 2008 financial years with logistic regression analysis. Corporate governance characteristics comprises with board size, CEO duality, outside directors, outsiders’ ownership, audit opinion, presence of an audit committee and remuneration of board members. Outside director ratio, presence of an audit committee and remuneration of board members turn out to be negatively associated with the probability of corporate failure, While CEO duality is positively related with the likelihood of corporate failure. Board size, auditor's opinion and outside ownership do not appear to be significant determinants. The paper offers evidence on the extent to which corporate failure associated with corporate governance. It would be educational to investors, financial analysts, accounting professionals, management and be helpful for regulatory authorities in making decisions, evaluations and policies.