ICBI 2015
Permanent URI for this collectionhttp://repository.kln.ac.lk/handle/123456789/10527
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Item The Effect of Foreign Exchange Market Returns on Stock Market Performance in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Perera, M.Exchange rate is one of the most influencing macroeconomic variables on stock returns in most of the countries. Thus, main objective of this study is to identify the effect of foreign exchange market returns on stock market performance in Sri Lanka. In order to evidence the study, researcher used publicly available secondary data from Colombo Stock Exchange and Central Bank of Sri Lanka. According to Guneratne (2011), exchange rate has a strong explanatory power in determining the stock market returns of the country. All share price index percentage changes are observed as dependent variable and the respective percentage changes of USD/LKR, EUR/LKR and GBP/LKR exchange rates as independent variables of this research. Exchange rate data for the period of 2002 to 2014 are considered for the research. A linear multiple regression model is developed to find the relationship between selected variables and following Noel & John (2009), correlation between variables are tested. Results of the research discloses that USD/LKR and GBP/LKR exchange rate returns have a strong explanatory power to All share price index (ASPI) returns. At the same time USD/LKR returns exhibits a negative correlation while other two exchange rates have a positive but weak correlation to ASPI returns. Findings of this research provide valuable information to investors in equity markets, to forecast potential stock returns with reference to exchange market fluctuations.Item Stock Market Performance under Different Presidential Terms: Evidence from Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Piyananda, S.D.P.; Fernando, P.N.D.Colombo Stock Exchange (CSE) plays a vital role in the growth of the key sectors of Sri Lankan economy. Even though there are several macro and firm specific factors effect on stock market performance, the main focus of this study is to examine the performance of CSE under different government leadership in Sri Lanka during the period from 1994 to 2014. This study mainly consider about the stock market indicators such as, All Share Price Index (ASPI), market turnover, market capitalization, turnover ratio, average market return etc. under different presidential terms. The sample period has divided in to four main presidential terms. Based on the indicators calculated to reflect the average market return, volatility and risk for each presidential term and based on the statistical analysis performed for each presidential term it was revealed that performance of stock market is superior under presidential term II (from 1999-2005).Item Predictability of Stock Returns Using Financial Ratios Empirical Evidence from Colombo Stock Exchange(Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Gunawardena, M.M.D.; Peiris, H.R.I.; Wijesundera, A.A.V.I.; Weerasinghe, D.A.S.; Krishna, T.P.C.R.The purpose of this research is to examine the ability of the historical financial information in constructing a resilient value portfolio for investors by predicting stock returns in the Sri Lankan context. One of the most imperative and interesting phenomena for the investors and the analysts would be the stock returns from the financial markets. The present study will aim at mainly to assess correlation between financial ratios and the predictability of stock returns for companies listed on the Colombo Stock Exchange. This study applies ordinary least squares (OLS) techniques to estimate the predictive regressions in form of simple and multiple models of panel data sets. For the current study, 60 listed companies were selected and 10 years of data has been analyzed from 2004 to 2013. The results highlighted that ROE, EPS and MV/BV have a significant positive relationship with the stock return which is followed by a simple equation to predict the future stock returns. Hence the investors should consider these ratios of the companies and movement in these ratios in selecting a resilient portfolio to invest.Item A Study on Colombo Stock Market Anomalies due to Presidential and General Elections(Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Karunarathna, M.B.R.D.; Wijayanayake, A.Over the years researchers are studying stock market anomalies to find ways to earn arbitrage profits. And the position of the government is an important factor when investing in stock market. Internationally extensive studies have been carried out to find whether there is a relationship between position of the government and the stock market anomalies. But there are no studies available for the Colombo Stock Exchange (CSE). Using daily market indices and election information from 1988 to 2015 this research examines the behavior of the CSE immediately before and after the presidential and general elections in Sri Lanka. Wilcoxon signed rank test and homogeneity tests were used in this analysis. Results show that share prices are continuously increasing before the election and decreasing after the polling date. There were few exceptions due to high political stability and instability in the preelection period. Banks Finance & Insurance, Hotels & travels and Manufacturing are the three sectors dominantly increased in the pre-election period. And Beverage, Food & Tobacco, Construction & Engineering and Stores & Supplies have no anomalies during the election period.Item Value Relevance of Accounting Information and Implication on Stock Price Movement: Empirical Evidence from Listed Bank Finance and Insurance Companies in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Jeyanthini, S.; Rubika, M.The investigation of value relevance of accounting information and its implication for emerging markets have received dearth attention in the literature. This study evaluates the relation between the value relevance of accounting information and stock price movement, using data obtained from 20 listed Bank Finance and Insurance companies in Sri Lanka covering the period of 6 years from 2009 to 2014. In order to select the sample random, sampling method used. The research design of this study based on a quantitative approach and analysis secondary data. Data of the selected firms which are listed in the Colombo stock exchange (CSE) Sri Lanka were obtained from their websites. This study identifies value relevance of accounting information by three separate financial ratios: Earning per Share (EPS), Return on Equity (ROE) and Earning Yield (EY) as independent variable while Average share price (ASP) as a dependent variable of this study. The statistical tests were used includes: descriptive statistics, correlation and regression analyses. Through the multiple correlation analysis with the help of user friendly statistical software it is found, there is significant and positive association between ASP and EPS (P= 0.000, < 0.01). Which indicate that, as the EPS increases it would tend to increase the ASP of the company. On the other hand, there is significant and negative correlation between ASP and EY (P=0.045, < 0.05). Which indicate that, as the EY increases it would tend to reduce the ASP of the company. The study also illustrates that main accounting information proxies have strong predict powers on variations of market share price.Item Impact of Working Capital Management on Financial Performance: Evidence from Plantation Sector Companies in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Jeyanthini, S.; Rubika, M.Working capital management (WCM) is an integral part of financial management and management of working capital may have a significant impact on the profitability. This study explores the effect of working capital management on financial performance in Sri Lanka covering the period of 2009-2014, based on a sample drawn from the listed plantation companies. The sample comprises of 15 plantation companies listed on the Colombo stock exchange (CSE). In order to examine the effects of WCM on financial performance, the ROA and ROE were used as measures for financial performance while cash conversion cycle, current assets to total assets and current liabilities to total assets were used as measure of working capital management. Data of the selected firms which are listed in the CSE were obtained from their websites. Pearson’s correlation and regression analysis are used in drawing empirical evidence to answer the research questions of the study. The results depict that there is a significant and negative association between CCC and financial performance, measured by ROE (P = -0.041, < 0.05) and ROA (P= -0.048, < 0.05). Which indicate that, as the cash conversion cycle increases it would tend to reduce the financial performance of the company. The results derived from this research signify that the might able to raise their profits by diminishing the time period for the debtors and inventories so that, time period for payables would increase.