13th Students’ Research Symposium 2023/2024
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Item The Effect of Capital Structure on Firm Performance: Evidence from Listed Diversified Financials Sector Companies in Colombo Stock Exchange: Pre- Crisis vs. Economic Crisis(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Ishanka, G. A. C.; Gunasekara, H. M. A. L.Introduction: This study investigates the impact of capital structure on the financial performance of diversified financial sector companies listed on the Colombo Stock Exchange (CSE) during pre-crisis (2014–2020) and crisis (2021–2023) periods. The objectives of the study are to evaluate the strength of the causal relationship between capital structure and firm performance of the listed diversified financial sector companies between the periods of 2014-2023 and to check whether there is a statistically significant impact between the capital structure and firm performance of the listed Diversified Financial sector companies before and during the economic crisis periods (2014-2023). This study addresses this gap by examining the effect of debt on three key performance metrics: Return on Capital Employed (ROCE), Return on Assets (ROA), and Tobin’s Q. Methodology: The research follows a quantitative approach using secondary data from 27 listed diversified financial firms. Panel data regression will be used for the analysis to evaluate the relationship between capital structure and firm performance, with firm age, size, tangibility, and sales growth as control variables. The economic crisis is incorporated as a dummy variable to assess its effect on firm performance. Descriptive statistics and t-tests are used to identify differences in firm performance between pre-crisis and crisis periods. Findings: The findings indicate a significant negative relationship between the debt-to-equity ratio and all three performance indicators (ROCE, ROA, and Tobin’s Q) and ROA, ROCE are significantly impacted by the Economic Crisis and Tobin’s Q is not impacted by the Economic Crisis. Conclusion: Capital Structure and Firm Performance is a highly discussed topic among researchers. However, studies done on specific sectors are very rare in the Sri Lankan context. Furthermore, the study has incorporated the economic crisis as well. Therefore, this study will provide insights into future research on this topic.Item Determinants of Capital Structure: An Analysis of Pre and During Economic Crisis – Evidence from Listed Consumer Services Sector Companies in Sri Lankan Stock Exchange(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Wijenayake, K. D. D. I.; Gunasekara, H. M. A. L.Introduction: Leverage plays a vital role in optimizing capital structure, and identifying determinants of leverage across varying economic conditions is crucial for strategic financial management. However, limited research focuses on recognizing key determinants of leverage in the consumer service sector in Sri Lanka, creating a gap in understanding its unique leverage dynamics and determinants. To fill this gap, this research endeavor aimed to examine the determinants of financial leverage in consumer service companies in Sri Lanka, with a specific focus on how these determinants behave before and during an economic crisis. Methodology: This study adopted a quantitative methodology to investigate the impact of firm profitability, size, asset tangibility, and growth on leverage, measured by the long-term debt-to-asset ratio. Data were collected from 15 listed Sri Lankan consumer service corporations, selected by size, covering eleven years from 2014 to 2024. Panel regression analysis was performed to identify the effects of these variables on leverage under different economic conditions. Findings: Profitability consistently showed a notable adverse effect on leverage, intensifying during downturns as firms prioritized internal financing to mitigate risks. Asset tangibility positively influenced leverage but diminished in relevance during crises. Firm size positively impacted leverage over the years, but larger firms adopted conservative financing strategies during economic uncertainty, mirroring smaller firms. Growth consistently exhibited an adverse effect on leverage, as growing firms avoided excessive debt, favoring financial stability. Conclusion: The impact of these determinants slightly weakened during crises due to restricted access to external financing. This emphasizes the importance of understanding contextual factors that influence financial decisions during periods of instability. These findings benefit corporate managers and policymakers by enabling more informed strategies for risk management and sustainable finance.