ICARE 2023
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Item The Impact of Corporate Governance on Intellectual Capital Efficiency: Evidence from Sri Lankan Banking Sector(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Weerasinghe, I.K.H.N.; Tilakasiri, K.K.Corporate Governance (CG) and Intellectual Capital (IC) have emerged as critical considerations in contemporary entities, addressing challenges such as dispersed investor collective action and conflicts among corporate owners. This study aimed to evaluate the impact of Corporate Governance (CG) factors and Intellectual Capital (IC) efficiency in the Sri Lankan banking sector. According to the study, Board Size (BSIZE), Board Activity (BACT), Board Independence Composition (BIND), Audit Committee Size (AUDS), and Frequency of Audit Committee Meetings (AUDM) were used as independent variables in terms of Corporate Governance. Consequently, Intellectual Capital was taken as the dependent variable. For this purpose, all populations of banking sector companies except three banks are selected as samples for this study during the period 2018 – 2022. This research used secondary data, data taken from the financial reports, annual reports, and banking websites over the mentioned years. The relationship between Corporate Governance factors and Intellectual Capital efficiency is calculated under descriptive statistics and regression model. Research results suggest that there is a positive significant impact of corporate governance on intellectual capital efficiency.Item The Impact of Corporate Social Responsibilities on Financial Performance of Listed Companies in CSE(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Sewvandi, R.W.V.C.; Tilakasiri, K.K.The key objective of research is to find out the impact of corporate social responsibility on financial performance. To examine the adoption of corporate social responsibility practices in each industry and to examine the significant association between corporate social responsibility and financial performance are other specific objectives. When comparing Sri Lanka with other countries there are considerable differences in economic, political, and ethical background. Thus, it is difficult to get a clear idea or a conclusion of the relationship between CSR and financial performance. Hence, this paper focused on examining the association between corporate social responsibility and the financial performance of publicly quoted companies listed in CSE to bridge the knowledge gap in the Sri Lankan context. This study mainly focuses on identifying the Effect of CSR on profitability. To analyze the relationship, this study mainly gets information from companies listed on the Colombo Stock Exchange. Public quoted companies are the companies that practice corporate social responsibility practices. That is the reason for selecting listed companies for this study The Colombo Stock Exchange (CSE) is the main Sri Lankan stock exchange; it has 295 listed companies representing 20 GICS industries as of 30th June 2022, with a market capitalization of 3,184.16 billion rupees.Item Impact of Liquidity Ratios on Profitability: With Special Reference to Listed Manufacturing Companies in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Rila, M.F.M.; Tilakasiri, K.K.The ultimate goal of the companies is to enhance the wealth of the shareholders. For that purpose, liquidity and profitability play a vital role. Especially the liquidity and its management are caused to a great extent by the growth and profitability of a firm. Liquidity management becomes the most important one as inadequate liquidity may be injurious to the smooth operations of the firm as well and the excess liquidity can be disturbed to achieve greater profits. In this way, the present study is aimed to investigate the relationship between liquidity and profitability. The analysis is based on 7 manufacturing companies listed on the Colombo Stock Exchange over past five years from 2018 to 2022. Correlation and regression analysis as well as descriptive statistics were applied in the analysis and findings suggest that there is a significant relationship exists between liquidity and profitability while the Quick ratio has no significant relationship with the ROE among the listed manufacturing companies in Sri Lanka. However, there has a low degree of influence in liquidity on the profitability of manufacturing companies. The relationship between liquidity and profitability is crucial to a company's goal of maximizing shareholder wealth. The current study explores the complex link between these two financial factors in this environment, highlighting the critical role that liquidity management plays. Both too little and too much liquidity present different problems that affect a company's ability to maximize profits and run its operations effectively. This research aims to unravel the dynamics between liquidity and profitability within the Sri Lankan manufacturing sector. Analyzing data from 7 manufacturing companies listed on the Colombo Stock Exchange over five years (2018-2022), the study employs correlation and regression analysis, along with descriptive statistics. The findings reveal a significant but nuanced relationship between liquidity and profitability, highlighting that while liquidity generally influences profitability, this impact varies in magnitude. Notably, the Quick ratio demonstrates an insignificant relationship with Return on Equity (ROE), suggesting complex financial dynamics at play in these firms. Beyond financial management procedures, the study's consequences provide business executives with information on strategic planning and decision-making. It emphasizes the necessity of a well-rounded approach to liquidity management that is in line with both more general strategic goals and operational requirements. The study provides a valuable empirical perspective on financial management in emerging markets, offering opportunities for future research on sector-specific liquidity management and external economic variables' impact on profitability.Item The Impact of Corporate Sustainability Reporting & Financial Performance Comparative Study between Banking & Consumer Durables and Apparel Sector(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Ranganath, G.K.; Tilakasiri, K.K.Corporate sustainability reporting is the practice of a company openly disclosing its environmental, social, and governance (ESG) performance, demonstrating its commitment to sustainable and responsible business practices. This reporting typically involves the publication of a sustainability report or integrated report, which details the organization's efforts, impacts, and initiatives in areas such as Environmental Performance: includes details about the company's energy consumption, greenhouse gas emissions, waste management, water usage, and efforts toward conservation and renewable resources. Sustainability reporting is guided by international frameworks such as the Global Reporting Initiative (GRI), the Task Force on Climate-related Financial Disclosures (TCFD), and the Sustainability Accounting Standards Board (SASB). The purpose of this paper is to provide a comparison between the consumer durables & apparel sector and banking sectors concerning the level of sustainability reporting (environmental, social, and governance (ESG)) and its impact on operational, financial, and market performance. The main research problem investigated in this research is “What is the impact on Corporate sustainability reporting and Financial performance of Banking & Consumer durables & apparel sector?”. The study depends on the selected sample which consists of 20 listed firms from Sri Lanka for five years from 2018 to 2022. The data used in this study were collected from annual reports presented in the CSE Website. The study sample included the Consumer durables & apparel sector and the banking sector. The study sample included 10 consumer durables and apparel sector companies and 10 banks. A multivariate model is used to investigate the impact of sustainability reporting (ESG) on a firm’s performance. The theoretical model is built on agency, legitimacy, resources, and stakeholders’ theories. The practical model is built on the independent variable and the dependent variables. The findings deduced from the empirical results on one hand demonstrated that ESG positively affects the financial performance in the consumer durables and apparel sector. However, on the other hand, the ESG negatively affects the financial performance in the banking sector.Item The Impact of Corporate Governance on Financial Distress: Evidence from Listed Non-financial Companies in Sri Lanka.(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Ranasinghe, R.A.L.N.; Tilakasiri, K.K.The study's goal is to investigate the impact of corporate governance on the financial distress of Sri Lankan listed non-financial companies. The three years straight negative cash flow and negative profit measures financial distress, while board size, board gender diversification, Frequency of board meetings, Education level of the board CEO duality and audit quality are proxies for corporate governance. The effect of corporate governance practices on financial distress is evaluated using 30 individual observations of non-financial firms listed in Sri Lanka from 2018 to 2023 and a fixed effects model. Additionally, Firm size, profitability are incorporated into the study as control variables to enhance the study's findings. And financial distress is measured based on an institute having a negative profit, cash flow or worth for three years as the unique nature of financial institutions prevents traditional methods of measuring financial distress, such as the Altman Z score model. In this study, descriptive analysis, corporate governance comparison model and regression analysis are used to analyze the data. The analysis results indicated that the following corporate governance variables, board size (BS), board gender diversification (BGD), frequency of board meetings (FBM), higher audit quality (HAQ), education level of the board (ELB), and the control variable of Firm size to have a significant negative impact on financial distress. Accordingly, these findings of the study can provide a framework to identify non-financial firms that are at risk of being financially distressed.Item The Impact of Corporate Social Responsibility on Financial Distress: Evidence from Listed Companies in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Nagodavithana, M.S.; Tilakasiri, K.K.In today’s business environment, Corporate Social Responsibility is of greatest significance, particularly because of Sri Lanka’s current financial crisis and the health of the global economy. This study aimed to evaluate the impact of corporate social responsibility on the financial distress of non-financial companies listed on the Colombo Stock Exchange (CSE). The study used secondary data from audited financial statements and annual reports of the listed firms in Sri Lanka besides financial companies over 2018 – 2022. The data was analyzed using Ordinary Least Square Regression. The disclosure index of corporate social responsibility measures the independent variable. The dependent variable financial distress is measured by the Z.Score model. Research results suggest a significant positive impact of corporate social responsibility on financial distress. Based on the findings, it was recommended that listed companies put corporate social responsibility activity management procedures in place to avoid facing financial distress.Item The Impact of Sustainability Reporting Practices on Firm’s Financial Performance – Evidence from Banking Sector(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Jayanima, I.W.W.; Tilakasiri, K.K.The purpose of this study is to determine whether there is a direct correlation between business performance as determined by Return on Assets (ROA) and sustainability reporting, more specifically, disclosures made under the Global Reporting Initiative (GRI), and Sri Lankan licensed commercial banks. This study uses a quantitative methodology to evaluate 10 selected licensed commercial banks' sustainability reporting practices between 2017 and 2022. This research used secondary data, data taken from the financial reports, annual reports, and sustainability reports issued by the companies. The study uses a conceptual framework in which corporate financial performance (ROA) is the dependent variable and sustainability reporting techniques (GRI) is the independent variable. General Disclosures(GEDI), Economic Disclosures(EODI), Environmental Disclosures(ENDI), and Social Disclosures(SODI) are the four subcategories that make up the independent variable. These variables are measured by the disclosure index of Sustainability reporting guidelines from GRI G4. Firm size also functions as a control variable (CVTA). The GRI index and ROA have a statistically significant positive association (R2=0.412) according to regression analysis results, demonstrating the positive impact of sustainability reporting on financial performance. Significant effects on ROA are notably caused by ENDI, SODI, and CVTA. On the other hand, there is no appreciable impact from GEDI or ECDI. The study admits its limitations despite its contributions to the literature, such as the sample's selectivity, the selection of independent variables being influenced by time and budget constraints, and the study's reliance on yearly reports as its main source of information.Item The Effect of Corporate Governance Mechanisms on the Degree of Integrated Reporting in the Listed Companies on CSE(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Chiranthana, U.H.; Tilakasiri, K.K.This study aimed to evaluate the effect of corporate governance mechanisms on integrated reporting in the listed companies on CSE. The sample of this study includes annual reports of 40 listed non-financial companies in Sri Lanka under market capitalization that reported IR disclosure information for five years during 2018-2022. This research used secondary data, data taken from the annual reports issued by the companies. The study considered four corporate governance mechanisms as independent variables that are board composition, board size, board diversity and ownership structure. The dependent variable is IR which is measured by using the Integrated Reporting Disclosure Index. Qualitative descriptive panel data analyses were used to analyze the information contained in the reports to recognize the impact of Corporate Governance Mechanisms on IR. Research results suggest that there is a positive significant impact of board composition, board size and ownership structure on disclosure of integrated reporting. However, there is no impact of board diversity on the disclosure of IR. Therefore, this study contributes to the current literature on IR in the Sri Lankan context. In order to avoid agency conflict, minimise the information asymmetry among stakeholders and maintain long-term relationships with their stakeholders, disclosure of integrated reporting information can be favourable for a company. The findings of this study also provide insights for policymakers and practitioners with regard to IR disclosures in companies that prepare integrated reports and need to establish specific guidelines in this respect.Item Impact of dividend policy on Stock Return; Evidence from listed Companies in Colombo Stock Exchange(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Anupama, R.R.M.L.; Tilakasiri, K.K.The major concern of this study was the impact of dividend policy on stock return of listed Companies in Colombo Stock Exchange. This research relies on secondary data which was collected from annual reports of listed companies in CSE. Data was collected from a sample of 30 companies under Listed Companies over five consecutive financial years from 2016 to 2020. Descriptive analysis and correlation analysis were used to perform the data analysis while regression model was expanded by adding two control variables named earnings per share, and size of the firm. While confirming the empirical results, the findings of this study showed a negative insignificant relationship between dividend payout ratios and stock return and a positive insignificant relation between dividend yield ratio and stock return. Moreover, there is a positive association between stock return and earnings per share, but a negative correlation between stock return and firm size and book value. Based on the finding of this study, dividend payout ratio and dividend yield have negative impact on stock return.Item The Impact of Corporate Social Responsibility on Corporate Financial Performance in the Manufacturing Sector in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Adhikari, A.M.C.S.; Tilakasiri, K.K.The concept of corporate social responsibility (CSR) is still wide, intricate, and dynamic; it covers a wide range of concepts and actions. The objective of this study is to examine the impact of corporate social responsibility on the firm performance of manufacturing companies listed on the Colombo Stock Exchange in Sri Lanka. In the study, 30 listed manufacturing companies were selected as a sample. CSR activities are considered explanatory variables, which are divided into three dimensions, such as economic, social, and environmental activities. Return on assets is used to measure firm performance, while firm size is treated as a control variable. The necessary data for this study was collected from the annual reports of the respective companies for a period of five years, from 2018 to 2022. Tests of hypotheses are conducted using multiple regression analysis to look at how CSR affects business performance. The results of the regression model reveal that there is a significant positive impact on economic and social activities, but there is a significant negative impact on environmental activities or return on assets (ROA). The findings of the study suggest that the management of the company should focus more on CSR practices to attract more customers to their product, which can increase firm value and shareholders' wealth in the future. Investors can profit more from their investments when they choose businesses that place a greater emphasis on corporate social responsibility.