1st ICARE Student's Conference - 2015
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Item Effect of financial leverage on firm size in Sri Lankan manufacturing industry(Department of Accountancy, University of Kelaniya, 2015) Waniganeththi, W.V.D.A.M.Companies differ in the use of financial leverage since it depends on a number of factors such as the size, nature of product, capital intensity, technology, market conditions, management attitude etc. Corporate size seems to be one of the most theorized determinants of financial leverage. Each company uses deferent level of financial leverage. But not all the companies are achieved success. Some corporates are achieved high market shares & growth rate. But some firm which has faced bankruptcy because they take more debt than the ability of repayment. There for financial leverage affect to the success of the company. In Sri Lanka, many companies they do not know how to maintain capital structure. So we won’t to known how to maintain capital structure on firm size. The purpose of this Research is to investigate, from a manufacturing market perspective, the firm size as a determinant of corporate financial leverage. Take 5 years data from 3 difference size firms, regression model is used to estimate the relationship between financial leverage and firm size. This research shows how firm size affects to financial leverage in Sri Lankan manufacturing industry.Item Impact of capital structure for business performance in Sri Lanka(Department of Accountancy, University of Kelaniya, 2015) Fernando, W.R.S.The discussion about the optimal capital structure has been a main topic in corporate finance from several years in Sri Lanka. Capital structure defines as a combination of debt as well as equity in an organization. Organizations have multiple financing sources. It can be categorize into two sources, the internal financing which includes common stocks, preferred stocks, reserves and retained earnings. Another source called external financing which consists short and long term loans and bonds issuance. It is challenging for organizations to identify the right mixture of debt and equity to achieve organizations goals. This research paper will examine the relationship between capital structure and business performance of public listed companies in Sri Lanka. The multiple linear regression and correlation were used to examine the relationship between capital structure and business performance. The sample of the study consisted of 20 public listed companies in Sri Lanka. This analysis is done by analyzing the financial statements of these companies from 2010-2014. Another expected Finding is the firm characteristics factors which also influence on business performance. The outcome of the statistical analysis made known that TDR and STDA has significant negative influence on the organization performance of business evaluated by ROA. The relationship in between ROA and TIE is positive as well as significant. However, DER and LTDA have negative but insignificant influence on ROA.Item Application of Sri Lanka accounting standards in small & medium sized enterprises(Department of Accountancy, University of Kelaniya, 2015) Nishanthi, W.P.L.Small and Medium Enterprises (SMEs) play an important role in both developed countries and developing countries. It contributes to the growth of the economy through employment generation, new venture development and by opening up new avenues for the growth in the economy. The Central Bank of Sri Lanka (1998) had stated that inadequate capital, inadequate institutional credit facilities, use of outdated technology, improper accounting techniques, inadequate sales promotion competencies and inattentiveness of small businesses are the main problems faced by the small businesses in Sri Lanka. Huck and McEwen (1991) argue that 12 competency areas such as starting a business, planning and budgeting, management, marketing/selling, advertising and sales promotion, merchandising and finance and accounting is needed for small business success. This study is done in relation to the factors leading to non-compliance with Standard accounting practices by the small and medium scale enterprises (SMEs) in Sri Lanka. The main objectives of the study focused on identifying the nature of the accounting practices and the factors leading to non-compliance with standard accounting practices by the SMEs. Efforts are made to examine the possible causes for noncompliance with the Standard accounting practices by the SMEs in Sri Lanka and the researcher expects that this study would fill the knowledge gap. The researcher uses structured interviews to collect data and selects 30 SMEs and 10 auditors for the study. Two interview guides will be prepared by the researcher for the SME owners, and for the Auditors. In the conceptual model the non-compliance is considered as the dependent variable and the independent variables are the cost of adherence to accounting standards, knowledge and competence of the owners, lack of qualified employees, relevance of standard guidelines and parties interested in the financial reports. The key finding is that, higher cost of adherence to accounting standards, lack of knowledge and competence of the owners, lack of qualified employees, and unavailability of parties interested in the financial reports other than owner is leading to non-compliance and the relevance of standard guidelines does not have a relationship with non-compliance. The non-compliance with Standard accounting practices is not only due to SMEs ‘can’t comply’ with them, but also due to not complying with them even when they are able to comply. The researcher finally makes recommendations to the policy makers, government and professional accounting bodies to design the policies and frameworks to ensure SMEs’ compliance with standard accounting practices.Item Affect of internal audit on firms performance(Department of Accountancy, University of Kelaniya, 2015) Dissanayake, W.G.P.K.This study attempt to evaluate the relationships between the internal audits characteristics such as professional qualifications of the chief audit executive of the Internal Audit, size, experience, and qualification; and firm performance. The internal audit is deemed as the core of business accounting as it is the section that keeps track of all businesses associated with the sector. The Objective of this research to identify relationship between Internal Audit and Performance of Sri Lankan Organizations. The internal audit efficiency assists in developing the company’s work because the financial reports present the internal audit department’s quality. In addition, an internal audit is a crucial part of corporate governance structure in an organization and corporate governance covers the activities of oversight conducted by the board of directors and audit committees to ensure credible financial reporting process. This study provides comprehensive oversights on the relationship between internal audit and firm performance.Item The empirical relationship between board size and firm performance of listed companies in Sri Lanka(Department of Accountancy, University of Kelaniya, 2015) Weerakkodi, W.A.S.L.A many studies investigate to the link between board size and firm performance in listed companies in Sri Lanka. The evidence on this area is very thin in Sri Lanka being a developing countries. The structure and size of the board and its impact on the performance of the firm is one of the most discussed issues of corporate governance. Board size, gender, duality, education, board age and Independent were the board structure variables, and ROA and ROE were the measurement device of firm Performance. Good corporate governance practices are regarded as important in reducing risk for investors, attracting investment capital and improving the performance of companies. Sri Lanka does not have large number of studies on corporate governance issues. Therefore, these kinds of studies on corporate governance issues will help to improve the corporate governance practice in Sri Lanka. Therefore, this study will provide a new perspective in studying the relationship between board size and firm performance. The purpose of this study is to examine the relationship between board size and firm performance in Sri Lanka for the extent of compliance of the CBP recommendations by the companies. Further, to investigate the relationship between the CEO duality and firm performance, to investigate the relationship between proportion of non-executive directors and firm performance.Item Corporate social responsibility practices and profitability of the manufacturing companies in Sri Lanka(Department of Accountancy, University of Kelaniya, 2015) Lakshitha, W.R.We are living in a world consist with numerous problems related to environment and society. Corporate Social Responsibility (CSR) is a means to sort out these problems to some extent because business is a part of society. The main purpose of the every business unit is earning more and more profits but social responsibility is an obligation to the people living inside and outside the business organizations. All the companies deal with the different group of society such as owners, employees, customers, government, suppliers etc. The responsibility of business, which includes satisfaction of these parties along with the owner, is called social responsibility of business. CSR typically includes issues related to business ethics, community engagement, global warming, water management, mange the use of natural resources, human rights etc.(Rani & Hooda,2013). So, in order to get sustainable development and to survive in this competitive world, the organizations need to establish a close and good relationship with society. The objective of this research is to find out the relationship between corporate social responsibility (CSR) practices and profitability of the manufacturing companies in Sri Lanka. This study will examine the relationship of CSR and profitability of the companies in a different view and different method. For investigating the listed manufacturing companies in Srilanka stock exchange market by using primary sources (Questionnaires, interviews) and secondary sources (financial statements, related documents)as well as time series and the correlation test will be applied in MS-Excel. It is expected to find that makes clear relationship in the aspect of identifying the costs and benefits of CSR, and how those costs and benefits will affect the accounting earnings or profits of the firms.Item The effectiveness of corporate accountability(Department of Accountancy, University of Kelaniya, 2015) Chamali, V.Since the 1990's, the world has witnessed the growing importance and visibility of a range of initiatives led by businesses, social organization, and governments, with the stated aim of pressuring companies to behave in more socially responsible and accountable ways. This is a new development for many parties of the business world. Previously, the government was assumed to lead standard setting and behavioral norms for business in relation to most categories of stakeholders. When community organizations and interest groups wanted to change business behavior, they focused on changing the law. From 1990's, the emergence of new alliance and regimes of influence over business norms linking together consumers, communities, workers and producers. This paper investigates how, why and when community - based strategies are effective in promoting corporate accountability (CA) to the poor. It argues that mainstream approaches to corporate social responsibility (CSR) underestimate the importance of power in the relationship between corporation and the communities in which they invest, which limits their applicability to many developing - country context in particular. In addressing this neglect, the article draws on literature on power, accountability and citizen participation in order to analyze cases where communities have attempted to hold corporations to account for their social and environmental responsibilities. The paper suggests that more attention should be paid to a number of state, corporation and community - related factors, which are found to be key to the effectiveness of strategies aimed at enhancing corporate accountability to the poor.Item An impact analysis of financial sector institutions’ capital structure influence over its performance in Sri Lankan(Department of Accountancy, University of Kelaniya, 2015) Balendra, V.The capital structure of a firm is basically a mix of debt and equity, which a firm deems as appropriate to enhance its operations (Kyereboah-Coleman, Anthony, 2007). A lot of investigations are being done on the implications of capital structure’s selection on organization’s value and its performance since the seminal work of Modigliani and Miller (1958). A wee little is empirically known about such implications in emerging economies such Sri Lanka. The purpose of this research is to explore empirically the impact of capital structure decisions on the financial sector organizations’ financial performance in srilanka as one of emerging economies. Regression analysis will be used in this research to identify the relationship between the leverage level and the performance of the financial institutions. Broad data covering the five year periods from 20102015 of financial institutions in srilanka will be gathered and analyzed with the regression analysis. The data all are quantitative in nature and already available on Colombo stock exchange database (secondary evidence).There are 69 financial institutions in Sri Lanka and most of them are levered firms. Based on Return on Capital Employed financial performance measurement and a financial institution’s leverage level the results are expected to reveal that capital structure has a moderate level of impact on organization’s financial performance.Item Impact of fair value disclosure of financial instruments in a bank for the fair presentation(Department of Accountancy, University of Kelaniya, 2015) de Silva, U.This research is based on the study of the impact of fair value disclosure of financial instruments in a bank for the fair presentation. Study whether it affects to the decision makers. For many years, users of financial statements have sought relevant and timely information about financial instruments and offbalance sheet items and activities. It is believe that fair value measurements and recognition of these values in the financial statements, along with adequate disclosures, will provide necessary information to evaluate properly an enterprise’s exposures to financial risks, as well as rewards (Anonymous, 2002).It is mandatory requirement by IFRS 7, firms to disclose fair value estimates of financial instruments. This paper contributes to assess the accounting practices of disclosure requirements of fair value of financial instruments in Sri Lankan banks. Whether fair value reporting reflects the economic reality by showing the volatility inherent in the values of financial instruments given changes in market conditions and operations of the enterprise (Anonymous, 2007). There are some important conceptual and practical issues relating to the reliable determination of fair value, it is better to first require full fair value disclosures before contemplating a shift to full fair value recognition in financial statements. That would enable investors, creditor, preparer, auditors, and regulators to learn from experience (Chea, 2011). This research is based on the secondary data. Secondary data will be collected by analysing the financial statements of 25 banks in Sri Lanka for the period of 5 years and referring research studies, empirical reports, and articles.Item Corporate social responsibility and financial performance(Department of Accountancy, University of Kelaniya, 2015) Lelwala, U.L.The field of corporate social responsibility has grown exponentially in the last decade. More than half of the Fortune 1000 companies issue corporate social responsibility (CSR) reports. (Margarita Tsoutsoura, 2004). That scenario will be common in Sri Lankan context because it can see most of Sri Lankan business organizations engaged in CSR activities nowadays. CSR reporting is developing area in financial statements today. The concept of CSR seems to be crucial for the growth and expansion of enterprises and surely has a huge impact on the accounting and finance system (Justyna Fijałkowska, 2014) according to that CSR has huge impact on Accounting and Financing system so it may be affect to the financial performance because financial performance is generates from firm accounting and finance system. The objective of this research paper is to identify whether there is any relationship between CSR activities and financial performance. It can be expected that there may be a relationship between csr and Financial Performance based on previous researches findings. The methodology is collect the data from financial statements and analyze the relationship by using statistical techniques such as correlation analysis, simple regression analysis and etc.