Students’ Research Symposium - Department of Finance (SRS-DFIN)
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Item The Impact of Cognitive and Emotional Behavioral Biases on Stock Investment Decision Making in CSE Sri Lanka: Evidence from Gampaha District(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Ratnavel, Akash; Gunasekara, A.L.Introduction: Understanding the cognitive and emotional biases that influence investment decisions is crucial, especially in the context of the Colombo Stock Exchange (CSE), which plays a critical role in determining market trends and impacting Sri Lanka's overall economy. Methodology: This study employs a structured questionnaire. The behavioral biases consider in this study are Disposition Effect, Anchoring Bias, Overconfidence, and Herding Behavior and they are measured through a structured questionnaire with a 5-point Likert scale. The population comprises individual investors in Gampaha, with a sample size of 105 chosen through convenient sampling. Findings: The model suggests that herding behavior, disposition effect, and anchoring bias have a more pronounced influence as behavioral biases, while overconfidence has a relatively lesser impact on the investment decision-making of individual investors at the Colombo Stock Exchange. Conclusion: This study reveals a substantial impact of behavioral biases on investment decisions at the Colombo Stock Exchange.Item The Impact of Integrated Reporting Quality on Cost of Equity and Financial Performance: Evidence from Licensed Commercial Banks in Sri Lanka(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) De Silva, W.A.C.R.; Gunasekara, A.L.Introduction: This empirical study examines the influence of Integrated Reporting Quality (IRQ) on the Cost of Equity (KE) and financial performance within the context of listed Commercial banks in Sri Lanka spanning the years 2013 to 2022. Despite existing research and literature exploring the link between IRQ, cost of equity, and financial performance in the banking industry, uncertainties persist. Methodology: The study focuses on the top 10 Licensed Commercial Banks in Sri Lanka that adhere to integrated reporting practices. Adopting a quantitative, deductive approach grounded in positivism philosophy, the research utilizes secondary data. Analysis employs quantitative techniques such as descriptive statistics, correlation analysis, and regression analysis to assess hypotheses formulated in response to the research question. STATA software is employed for data analysis, with panel data utilized for the study. Findings: The study incorporates three models: the Return on Assets (ROA) model, Return on Equity (ROE) model, and Cost of Equity (Ke) model. The findings, based on various statistical methods, reveal a positive and statistically significant relationship between IRQ and ROA at the 1% significance level. Additionally, a negative and statistically significant relationship is observed between IRQ and ROE in Licensed Commercial Banks in Sri Lanka at the 5% significance level, along with a negative and statistically significant relationship between IRQ and Ke at the 1% significance level. Conclusion: To enhance Integrated Reporting (IR) practices in Licensed Commercial Banks, recommendations include fostering regular stakeholder engagement, demonstrating value creation through the use of technology, and developing mechanisms for effective communication.Item The Impact of Service Quality, Customer Satisfaction, and Corporate Image in Building Customer Loyalty in The Sri Lankan Banking Industry(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Wijerathna, K.G.D.T.U.; Gunasekara, A.L.Introduction: The banking industry is experiencing intense competition, necessitating the development of strategies to retain existing customers rather than solely focusing on customer acquisition. Cultivating customer loyalty is crucial for the long-term sustainability of banks. This study investigates the impact of service quality, customer satisfaction, and corporate image on customer loyalty within the Sri Lankan banking sector. Methodology: A structured questionnaire was employed to gather primary data from 380 bank customers in the Colombo district. Data collection utilized a Likert-type scale questionnaire administered to randomly intercepted customers exiting banks. Descriptive and inferential statistical techniques were applied to analyze the collected data using the SPSS software package. Findings: The findings reveal a positive and significant impact of service quality, customer satisfaction, and corporate image on customer loyalty. These results imply that banks should prioritize enhancing service quality, ensuring customer satisfaction, and fostering a positive corporate image to cultivate customer loyalty. These findings suggest that banks should focus on improving service quality as a primary strategy for increasing customer loyalty. Banks should also invest in initiatives that enhance customer satisfaction and project a positive corporate image to further boost customer loyalty. Conclusion: Overall, the study's findings provide valuable insights for banks in Sri Lanka on how to cultivate customer loyalty and achieve long-term success in the increasingly competitive banking landscape.Item Impact of Integrated Reporting on Firm Value of Listed Companies in Consumer Discretionary Sector in Sri Lanka: Analysis of Moderating Effect of External Financing(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Kodithuwakku, N.R.; Gunasekara, A.L.Introduction: Integrated reporting is new approach to business reporting that is built around the organization’s strategy to create and sustain value in the short, medium and long term. This process results in the production of a periodic integrated report, which according to the framework issued by the IIRC. This study aims to investigate the impact of integrated reporting on firm value of listed companies in consumer discretionary sector in Sri Lanka by considering moderating effect of external financing. Methodology: This research develops an informative outcome, covering 13 consumer discretionary sector companies listed in the Sri Lankan Stock Exchange from 2015 to 2022. The integrated reporting was measured using content analysis with the support of an integrated reporting developed index and, the firm value was measured by Tobin’s Q. In analyzing the data, the study adopted the panel regression using Stata -13 software. Findings: The study results revealed that integrated reporting has an insignificant positive relationship with firm value, and this relationship is not strengthened in firms with higher needs for external financing. Conclusion: Sri Lankan consumer discretionary sector companies have failed to gain the benefits of integrated reporting yet.Item The Impact of Integrated Reporting Practices on the Firm Value of Insurance Companies in Sri Lanka:Analysis of Moderating Effect of External Financing(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Imesha, B. Achila; Gunasekara, A.L.Introduction: The aim of this study is to evaluate the impact of integrated reporting practices on the firm value in insurance companies in Sri Lanka by analyzing the moderating effect of external financing. Methodology: This study use data of 13 Insurance Companies from 2015 to 2022.The study conducted by using panel regression analysis. The data was obtained from the published annual financial reports of the sampled insurance companies. IR was measured by using content analysis and Tobin’s Q as a proxy for firm value. Findings: The results of the regression analysis revealed that IR positively and significantly effects the firm value in insurance companies in Sri Lanka while supporting the findings of the prior literature. When it is higher the disclosure level of IR company, it will earn a relatively higher firm value. Conclusion: The paper concluded that the IR effects the firm value in Insurance companies in Sri Lanka.Item Integrated Reporting on Firm Value of Listed Companies in Consumer Staples Sector in Sri Lanka: Analysis of Moderating Effect of External Financing(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Perera, M.A.K.M.; Gunasekara, A.L.Introduction: The concept of integrated reporting has arisen as a progressive approach to corporate reporting, merging financial and non-financial data to provide a holistic perspective of a company's value creation and sustainability. The consumer staples sector plays a critical role in the economy of Sri Lanka. By adopting integrated reporting practices, companies in the consumer staples sector can enhance transparency, accountability, and their ability to create long-term value. The primary objective of this research is to analyze the relationship between integrated reporting and firm value among listed companies in the consumer staples sector in Sri Lanka. Methodology: The target population for this research comprises all the listed companies operating in the consumer staples sector in Sri Lanka. The present study based on secondary data of listed consumer staples sector companies at Colombo Stock Exchange (CSE). The secondary data are collect for the study during the period of eight years (2015 -2022). The data analysis using SPSS version 22. Findings: In the consumer staples industry of Sri Lanka, integrated reporting has a substantial effect on firm value, according to the study. Conclusion: The study's implications carry significant importance for the consumer staples industry in Sri Lanka. Due to the adverse relationship between IR and firm value, companies need to rethink their integrated reporting.Item The Impact of the Determinants of Financial Soundness on Firm Performance: Evidence from Listed Finance Companies in Sri Lanka(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Pathirana, H.P.S.S.; Gunasekara, A.L.Introduction: The success and sustainability of finance companies that play a crucial role in the economic development and stability of Sri Lanka rely heavily on their financial soundness, which is measured through indicators such as capital adequacy, asset quality, profitability, and liquidity. However, there is a research gap in understanding the specific impact of financial soundness on LFC’s performance within the context of Sri Lanka. Methodology: This study examines the impact of financial soundness indicators on finance company's ROE and ROA. Study adopts a quantitative research design, utilizing secondary data and panel regression methods. The sample size includes 09 finance companies over a 10-year period (2013-2022) to ensure adequate representation and diversity. Findings: Higher capital adequacy positively influences ROA but not ROE. Effective NPL management consistently boosts both ROA and ROE. Liquidity has no significant impact, while higher profitability consistently improves both ROE and ROA in listed finance companies in Sri Lanka. Conclusion: The insights contribute to understanding the crucial dynamics between financial soundness and performance in the Sri Lankan finance sector, offering valuable implications for policymakers and industry stakeholders.Item The Impact of Behavioral Biases on Stock Investment Decisions: Evidence from Kaluthara District in Sri Lanka(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Fernando, M.N.M.; Gunasekara, A.L.Introduction: This research investigates the impact of behavioral biases on individual investors' decisions within the Colombo Stock Exchange, focusing on the Kalutara district in Sri Lanka. The study employs behavioral finance to uncover biases such as anchoring, overconfidence, disposition effect, and herd behavior, examining their collective influence on decision-making. The research addresses a gap by specifically exploring investor biases in the Kalutara district, considering the unique features of the Colombo Stock Exchange. Methodology: Guided by a positivist research philosophy and employing deductive research logic, the study utilizes a quantitative approach. The conceptual framework includes biases like the disposition effect, overconfidence, anchoring, and herding. The target population consists of individual investors actively participating in the Colombo Stock Exchange, with a representative sample of 103 investors selected through simple random sampling and carefully stratified based on demographic variables. Reliability testing indicates acceptable internal consistency (Cronbach's alpha = 0.634), while validity assessment suggests room for improvement (Cronbach's alpha = 0.490). With an 88% response rate, the demographic profile reveals a predominantly younger investor population, male dominance in stock investment, and a well-educated and diverse sample. Findings: The analysis of behavioral biases through a rating scale demonstrates a moderate level of explanatory power, with 23.4% of the variability in investment decisions explained by considered biases. The regression model highlights the significance of predictors, with disposition effect and anchoring exhibiting strong associations. Contrary to expectations, overconfidence bias has only a marginal effect, emphasizing the importance of exploring contextual variations. Anchoring bias emerges as the most influential factor, underscoring the need for preferential consideration when examining behavioral biases in the Colombo market. Conclusion: The study challenges existing literature by identifying anchoring bias as the sole significant factor in investment decisions, emphasizing the importance of tailoring analyses to specific market conditions and demographics for a comprehensive understanding of investor behavior in the Kalutara district.Item The Impact of Firm Performance on Market Capitalization in Listed Insurance Companies in Sri Lanka(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Madhusanka, P.G.S.; Gunasekara, A.L.Introduction: This research investigates into the relationship between firm performance and market capitalization within Sri Lanka's listed insurance sector. Methodology: Key financial indicators, including Return on Equity (ROE), Return on Assets (ROA), Capital Adequacy Ratio (CAR), Current Ratio (CR), and Total Assets (TA) as control variables, are examined using a quantitative approach. This study uses a sample 10 years of data of listed Insurance companies in the Colombo Stock Exchange. This study employs fixed effect panel regression method to investigate the relationship between firm performance and market capitalization. Findings: The findings reveal that Total Assets demonstrate a robust, positive correlation with market capitalization, indicating larger insurers' attractiveness for investment. Notably, ROE emerges as a significant predictor, emphasizing profitability's critical role in assessing growth potential within insurance companies. Conversely, ROA, CAR, and CR do not exhibit statistically significant relationships with market capitalization. The results challenge prevailing hypotheses, indicating that neither profitability nor liquidity substantially influences market capitalization. Conclusion: In conclusion, this research bridges a crucial knowledge gap within Sri Lanka's insurance sector, offering empirically grounded insights for stakeholders. The findings provide a foundation for subsequent research and actionable implications, guiding future investment strategies, regulatory frameworks, and strategic initiatives.Item The Impact of Cognitive and Emotional Behavioral Biases on Stock Investment Decision Making in CSE Sri Lanka: Evidence from Colombo District(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Husni, N.M.; Gunasekara, A.L.Introduction: This research investigates the influence of cognitive and emotional behavioral biases on stock investment decision-making within the Colombo Stock Exchange (CSE). It explores the effects of disposition effect, anchoring, overconfidence, and herding behavior on the investment decisions of individual investors in the Colombo district. The primary objective is to analyze the relationship between these biases and their impact on stock investment choices. Methodology: Primary data is gathered through a structured questionnaire that includes demographic factors, the dependent variable (investment decision), and independent variables (behavioral biases). The data is collected from a convenient sample size of individual investors in the Colombo district. Analysis of the results is conducted using the SPSS software. Findings: The collected data yields reliable and significantly valid results. The study employs descriptive analysis, Pearson's correlation analysis, and linear regression analyses. The findings suggest a noteworthy impact of anchoring bias and herding behavior on investment decisions, with a comparatively lesser impact observed for disposition effect and overconfidence bias among individual investors in the Colombo district. Conclusion: Based on these results, investors are advised to take into account the influence of anchoring and herding behavior for making effective investment decisions. This approach aims to optimize returns while minimizing risks when engaging in stock investment activities on the Colombo Stock Exchange.
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