ICARE 2021
Permanent URI for this collectionhttp://repository.kln.ac.lk/handle/123456789/24724
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Item Corporate Governance and Timeliness of Audited Financial Statements: Evidence from Listed Material Companies in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Withanachchi, R.S; Kawshalya, M.D.P.The timeliness of companies audited financial statements is regarded as to a significant aspect influencing the usefulness of information available to external users for decision making process. The shorter the audit report delay in releasing audited financial statements, users of financial statements can obtain more useful information and benefits from these statements. The purpose of this study is to investigate influence of composite corporate governance (CG) on audit report delay. Corporate governance is investigated under three specific categories namely audit committee, board structure and operations, board diversity on audit report delay (ARD). Furthermore, this study identified factor that affect ARD other than corporate governance such as liquidity, profitability-return on equity, auditor type, number of subsidiaries and size of the company. The data for the study is collected from annual reports of all the listed companies of material sector in Colombo Stock Exchange (CSE), covering period of 2011/2012 to 2019/2020. Data were analyzed using regression analysis and E-Views packages. This study generates valuable insight in the area of corporate governance and timeliness of audited financial statements in Sri Lankan context.Item The Impact of Board Characteristics on Financial Reporting Quality: Evidence from Listed Companies in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Silva, D.P.A.M.S.; Kawshalya, M.D.P.The generation of quality financial or earnings information depends on a whole set of governance mechanisms in the organization. The board of directors, as the responsible party the core of corporate governance (CG), will play a key role in supervising company’s financial reporting process and the quality of financial reporting. In the context of Sri Lanka several large firms had collapsed due to poor CG mechanisms. However, these failures could have been averted if the quality financial information was available on a timely basis by taking appropriate actions by the board of directors. The purpose of this study is to examine the association between board related characteristics including audit committee attributes and the degree of financial reporting quality in listed companies in Sri Lanka. Several prior studies have examined this association in both developed and developing countries. However, there is dearth of literature available in the Sri Lankan context. Moreover, the existing literature has revealed mixed results and therefore, comprehensive evidence is missing related to the subject. This study contributes to existing literature by integrating both board and audit committee characteristics on financial reporting quality which is an under-research area. This study adopts a quantitative research approach that analyses secondary data extracted from the annual reports of the companies listed in Colombo Stock Exchange (CSE) excluding banks, insurance and diversified financial industry groups for a period of five years from 2015/16 to 2019/20. Descriptive statistics, correlation analysis, ordinary least square analysis and panel version of regression analysis are used to analyze the quantitative data of the study. The findings of the study will invariably boost the investor confidence as the chances of corporate failures will be minimal and informed decision making by the investors are facilitated and provide a support basis to both professional and relevant regulatory bodies to make necessary reforms as required to the current regulatory framework for the CG mechanism in Sri Lanka.Item Auditor’s Opinion, Auditor’s Size, and Value Relevance of Accounting Information(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Saran, V.; Kawshalya, M.D.P.The main Purpose of this research is to study the effect of auditor’s opinion and audit firm size on the value relevance of accounting information of the companies listed on the Colombo stock exchange during the years 2018-2021. The feature of financial information to significantly affect the investors’ decision-making process, reflected by the stock price or stock return, is called value relevance The research includes a sample of 107 companies’ observations for 4 years drawn from the listed companies, and the research hypotheses were analyzed using multivariate regression model based on panel data. Data are hand collected from the annual reports of the companies. Financial institutions, banking, finance, and investment firms are also eliminated since their accounting and reporting environments differ from those in other industries.Item The Audit Committee Characteristics and Earnings Quality of Public Listed Companies in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Rathnayake, M.L.M.L .; Kawshalya, M.D.P.This study examines the impact of Audit Committee Characteristics on Earnings Quality of Public Listed Companies in Sri Lanka. Several prior studies have examined this relationship in developed countries. There appears to be a dearth of literature on the subject in developing and Asian countries and Sri Lanka in particular. Moreover, the extant literature provides mixed results and therefore, comprehensive evidence is missing relating to the subject. This study contributes to the existing literature by integrating both Audit Committee Characteristics and Earnings Quality. Quantitative approach is adopted in the study to find answers for the research questions. Audit Committee Size, Audit Committee Independence, Number of Audit Committee Meetings, Financial Experience of Audit Committee Members and Percentage of Common Stocks Owned by Audit Committee are used as independent variables and Earnings Quality used as the dependent variable of the study. Regression analysis is used to analyze data. The dataset covers all companies in the Colombo Stock Exchange in Sri Lanka except banks, finance and insurance companies and collected data for 5 years period from 2016 to 2020. Findings of the study will be useful to identify the impact of disclosure quality on the financial performance of the listed companies in Sri Lanka. Findings also provide useful insights to regulators and policymakers in coming up with appropriate policies.Item Predicting Auditors’ Opinions Using Financial Ratios and Non-Financial Metrics; Evidence of The Listed Food, Beverage and Tobacco Companies in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Ranasingha, R.A.R.N.; Kawshalya, M.D.P.The purpose of this study is to investigate the extent to which a model based on financial and non-financial variables predicts auditors’ decisions to issue qualified audit reports in the case of companies listed on the Colombo Stock Exchange. The population of the considering sector consists of fifty listed companies according to the official webpage of Colombo Stock Exchange as of 31st August 2021. Then out of the population, there are 25 listed companies were selected for the sample according to the Market Capitalization. The financial statements in the year range of 2016/17-2020/21 of those companies was taken to obtain evidence for the analyzing purposes of the research. The predictive accuracy of the estimated model is evaluated using a regression model for the probabilities of qualified and clean opinions. The paper has practical implications as this can assist auditors in identifying factors motivating audit report qualifications, mainly in emerging economies. The paper contributes to auditing research, since very little is known about the determinants of audit opinion in emerging markets including Sri Lanka.Item The Impact of Fair Value Estimates on External Audit Fees: Evidence from Listed Banks and Finance Companies in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Madhushani, V.P.P.; Kawshalya, M.D.P.Fair value measurement has been considered as vital aspect in the preparation of financial statements and in auditing such financial statements. Since, the ever-increasing use of Fair value accounting is more useful for providing such benefits as relevant financial information and improving transparency of financial reporting. Further, the concept of fair value accounting is relatively new to the accounting and auditing profession when compared to the traditional accounting method. Hence, the application of the fair value concept is rather complex. Consequently, more audit effort is required from auditors to provide assurance in financial reporting. Specially, the primary motivation of this study is no research has been done on fair value estimates and audit fees in the Sri Lankan context. Therefore, the main purpose of the current study is to examine the impact of fair value estimates on audit fees of listed banks and finance companies in Sri Lanka. Data was collected from the annual reports of all banks and finance companies listed in the Colombo stock exchange for four years from 2017 to 2020. The data was analyzed by using e- views statistical package. This study used descriptive statistics, correlation, and regression analysis to find out the association between the independent variables and dependent variable. Accordingly, findings of this will offer a better understanding of the influence of fair value estimates has on audit fees. Further, the findings of this study will provide interesting insights for policymakers, auditors, companies, standard setters, and investors.Item The Impact of Covid-19 Pandemic on Financial Soundness of Listed Companies in Sri Lanka: An Application of Altman’s Model(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Basnayaka, B.M.T.S.; Kawshalya, M.D.P.The financial position of listed companies is an issue that every stakeholder is concerned about very much. Therefore, investment decisions of the investors are based on the companies’ financial position. The management of the companies try every means to improve the company’s financial position and hopes to maintain good trends in the future. The objective of the study is to investigate the impact of COVID 19 pandemic on financial soundness of listed companies in Sri Lanka. Financial soundness is measured using application of Altman’s z -score model. The sample of this study consists of all the companies listed in Colombo stock exchange excluding bank, insurance, and diversified financials industry group between for the period of 2016-2020. Accordingly, this study uses secondary quantitative data by using annual reports of the listed companies. Correlation analysis is to use analyses data using statistical techniques. This study will contribute to the body of knowledge by identifying how listed companies manage their financial soundness and how COVID 19 influences on financial position. Then, it will be useful to decision makers and policy makers to ensure effective financial position.Item The Effect of Inventory Management Practices on Financial Performance of Listed Material Sector Companies in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Dileshana, P.K.A.U.; Kawshalya, M.D.P.The material manufacturing sector companies have a significant concern over its inventory management and financial performance. Accordingly, it is important to identify the impact of inventory management on financial performance and many researchers have conducted their researchers relating to this impact in worldwide. But no consensus among researchers on the impact of inventory management on financial performance since they have identified negative and positive relationship between inventory management and financial performance. The objective of this research is to find out whether the inventory management practices have an impact on financial performance of listed material manufacturing companies in Sri Lanka. Data collection of this study is carried out with sample of 25 listed material manufacturing companies in Colombo stock Exchange for a period of six years from 2015 to 2020. Descriptive analysis and inferential analysis which has multiple regression analysis and correlation analysis is used to analyze the data. There are four key variables as, inventory turnover, inventory to current assets, inventory conversion period and inventory to sales ratios considered as the independent variables. The return on assets is used as the dependent variable to measure the financial performance of companies.Item The Impact of IFRS 16 Lease Capitalization on Financial Statement and Key Ratios: Evidence from CSE Listed Companies in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Sherad, M.; Kawshalya, M.D.P.The exploit of leasing as a form of asset financing has been growing worldwide during the last two decades. The International Accounting Standard Board published IFRS 16 leases in January 2016 with an effective date of 1 January 2019. The new standard eliminates the lessee’s distinction between operating and Finance lease, it will have a substantial impact for companies have previously kept the largest proportion of their financing off balance sheet. The purpose of the study is to examine the impact of lease capitalisation on key financial ratios of listed companies in Sri Lanka. The method applied for the research is the constructive capitalisation approach which is based on the disclosed operating lease commitments in financial statement-year ended 31st March 2019. For the investigation purpose, we have selected the Colombo Stock Exchange (CSE ) listed 215 Companies representing twenty Global Industry Classification Standard (GICS) industry groups. The results of the study will diminish the impact of this important change in lease accounting and significantly encouraged, improving and analyzing the information to all stakeholders when making economic decisions.