Students’ Research Symposium - Department of Finance (SRS-DFIN)

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    Determinants of Profit Heterogeneity at Firm Level: Empirical Evidence from Sri Lankan Manufacturing Sector
    (Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Madumadavee, W.A.J.
    The fundamental purpose of this study is to determine and investigate the importance of different factors that has an impact on profit heterogeneity at firm level specifically within the context of Sri Lankan Manufacturing sector. When it comes to the Sri Lankan manufacturing sector, it is gradually developing year-by-year and the contribution to GDP is considerable. Therefore, going with an investigation on it is essential since it helps certain parties to make better decisions. This study used multiple regression analysis for panel data of 12 listed firms over the period of 2010- 2014 to explain variation in firm profitability. Using return on assets as the dependent variable, it has developed a model to observe the impact of different independent variables on profit variation. Profitability has a moderate positive relationship with the identified firm-specific variables. This study demonstrates that the variables such as liquidity, age since listed and size of the firm are the dominant factors in explaining total variation in profitability and the liquidity and age adversely affecting it. While size is having an inverse relationship with profitability of manufacturing firms, growth, capital intensity and market share is having a negative insignificant impact on profitability. It is found that leverage is having a positive insignificant relationship with the profitability. The findings have strong policy implications for both the companies and the economic managers of Sri Lanka. The managers and the owners of the manufacturing sector firms operating in countries like Sri Lanka should consider both the capital structure and liquidity level to realize higher profitability. The research will support firms to develop better strategy than before. It also helps the manufacturing firms to better deal with competition it faces from the industry. This is probably the first study of its kind that tries to explain variation in firm profitability in Sri Lankan manufacturing sector.
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    Capital Structure and Its Impact on Profitability: With Special Reference to Listed Manufacturing and Service Companies in Sri Lanka
    (Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Weerathunge, S.I.
    This study investigates the relationship between capital structure and profitability of listed manufacturing and service sector companies in Sri Lanka. The study covers six years period from 2009 to 2014 and the sample size is five companies from service sector and twenty companies from manufacturing sector. The study uses return on assets (ROA) and return on equity (ROE) as performance variables. In addition debt equity ratio (DER) and debt assets ratio (DAR) are used as capital structure variables. The relationship between the performance and capital structure variables are analyzed using correlation coefficient and regression techniques. According to the results of this comparative study the relationship between capital structure and return on assets is not significant across all the observations carried out for both manufacturing and service sector except one observation in manufacturing sector. It also shows an insignificant relationship between profitability between debt assets ratio. However, there is a significant relationship in all observations between return on equity and debt to equity in both manufacturing and service sector. Moreover the study reveals that the nature of the industry also determines the effect of capital structure on their profitability. In manufacturing firms, there is a negative significant relationship between return on equity and debt equity ratio while service sector reveals a positive significant relationship between return on equity and debt equity ratio.
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    The Determinants of Financial Performance in Insurance Companies in Sri Lanka
    (Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Kumarasinghe, K.K.A.M.R.
    With the drastic changes take place in business sector, importance of Insurance Companies increase gradually. They play a vital role and contribute significantly to the development of the country. Hence, this study focuses on identifying the determinants of financial performance of insurance companies in Sri Lanka. Financial performance is measured through Return on Assets and eight independent variables such as Leverage ratio, Liquidity, Age, Size, Underwriting Risk, Retention Ratio, Tangibility and Volume of capital used for this study. Eight insurance companies randomly selected as the sample of this study out of available 22 insurance companies for the period of 2009-2014. Required secondary data gathered though the Annual reports of each company, IBSL (Insurance Board of Sri Lanka) annual reports and IBSL statistical review. This study use descriptive statistics and regression analysis as the statistical tool. According to the study leverage ratio and retention risk significantly effect of financial performance of Insurance companies Further retention ratio and tangibility positively related with return on assets and age, size, leverage, liquidity, volume of capital, underwriting risk negatively related with return on assets.
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    Empirical Study on Bank Profitability and Efficiency in Sri Lanka
    (Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Senarath, Y.M.
    In this study, analysis the efficiency and profitability of Sri Lankan banking industry from 2010-2014. It uses a non-parametric approach, the data envelopment analysis (DEA) to measure bank’ efficiency to analyze the technical efficiency of the Sri Lankan banks. This research has used only secondary data for the purpose of analysis and the sources of data include the annual publications of the Central Bank and the annual reports of listed domestic commercial banks and listed foreign commercial banks. In order to obtain yearly figures of listed commercial banks this study have selected fourteen domestic commercial banks and two foreign commercial banks. The reason behind the selection of the banking industry in Sri Lanka is mainly due to the reasons of competition among the banking sector and the key role they play in the country to protect the stability of the financial system. The efficiency of the banking industry is important when determining stability of the payment and settlement system of the economy. Therefore, objective of the study is to find the efficiency of the banking industry by using DEA as a new approach for measuring efficiency. The problem of the study is to find whether profitable banks are efficient. Results indicate that banks are operating at a higher level of efficiency recording an overall technical efficiency of 84.46 percent. In accordance with the regression result, there is a positive relationship between bank profitability, efficiency and loan diversification factors.
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    Dividend Determinates of Manufacturing Companies of Sri Lanka: Empirical Evidence from Colombo Stock Exchange
    (Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Ishara, M.N.F.
    Dividend distribution decision is one of the key areas of decision making, it follows up with the questions as of “Are we going to declare dividends”, if so “how much to declare”. These questions should be addressed by the finance manager so that it would not affect any interested stakeholder party adversely. This research is conducted to identify what are the key determinants of dividend payments of manufacturing companies in Sri Lanka. Various researches have being conducted in the similar scope including researches in south Asian region, yet within the Sri Lankan stock market the above said scope has not being addressed. I have made an attempt to cover this gap through this research. The research is conducted on fifteen selected manufacturing companies that often pays dividends which are listed in Colombo stock exchange. I have selected five independent variables supported by previously done researches. Namely - profitability, firm size, liquidity, leverage and growth. These variables are observed to its performance with dividend pay-out ratio, which is my dependent variable. I was able to conclude that there is a significant effect of the profitability determinant when paying dividends in manufacturing companies in Sri Lanka.