International Journal of Accountancy

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Effect of Socio-demographic Factors (Age, Occupation and Education) on Behavioral Biases of Individual Investors’ Decision-making Evidence from The Colombo Stock Exchange
(Department of Accountancy, University of Kelaniya, Sri Lanka., 2021) Gunathilaka, R. C.
The purpose of this paper is to investigate the effect of age, occupation and education on the relationship between behavioral biases and financial decision-making of individual investors based on The Colombo Stock Exchange (CSE). This study considers overconfidence bias, representativeness bias, disposition effect and herd-mentality bias on the financial investment decision-making of individual investors, taking steps to fill the empirical gap and practice gap in Behavioral Finance context. A questionnaire was utilized to collect data and the sample consisted of 114 individual respondents. Finally, data of 100 investors was analyzed by using Partial Least Square-Structural Equation Modeling approach. The study revealed that age moderates the relationship between disposition effect and investment decisions of individual investors. Further, occupation also moderates the relationship between herd-mentality bias and individual investors’ investment decisions. This study is one of the pioneering studies examining the effect of socio-demographic factors of age, occupation and education on the relationship between behavioral biases and individual investors’ decision-making, Further, this study sheds light on the rare prior studies that relate socio-demographic factors to behavioral biases of individual investors’ decision-making, particularly in emerging markets context while expanding the extant literature in Behavioral Finance.
Digitalization of Environmental Tax: the right Tax Policy Reform for Nigeria
(Department of Accountancy, University of Kelaniya, Sri Lanka., 2021) Garba, I.; Bappayaya, B.; Gambo, I.; Oluwakayode, A. M.; Ayodele, A. J.
The paper examined different tax policy options that are currently under consideration in the Nigerian economy in supporting tax policy and its administration reforms. Online tax systems are rapidly replacing cumbersome manual-based tax reporting systems which help the ease of doing business in Nigeria by reducing human intervention in the payment and collection of tax and by extension, checks the possibility of connivance of tax officials with fraudulent taxpayers to evade tax. A quantitative method was used in generating data for the studies of which tax consultants and policymakers were randomly selected in the north-east part of the country, and free rider theory was adopted for the research work. It has been recommended that digitalizing environmental taxes is the most efficient tax policy of pursuing many environmental policy goals. There is also the need for consistency and transparency in the policies. Due to the imposition of any environmental tax requires countries to be fair, transparent and keep environmental objectives as priorities.
Responses of Share Returns to Macroeconomic Information: An Empirical Examination of Bank, Finance and Insurance industry in Sri Lanka
(Department of Accountancy, University of Kelaniya, Sri Lanka., 2021) Waidyarathna, C. M.; Rajeshwaran, N.
The purpose of this study is to examine the impact of macroeconomic variables on Share Returns of Banking, Financing, and Insurance (BFI) companies listed at the Colombo Stock Exchange (CSE). The Theory of Efficiency Market Hypothesis (EMH) is applied to investigate the research. The study used secondary data of companies listed under Banking, Finance and Insurance sector in CSE from 2010 to 2017. Macroeconomic variables include Exchange rate, Interest rate, Inflation rate and Broad Money Supply (M2). The macroeconomic data were collected from the Central Bank of Sri Lanka. Descriptive Statistics, Augmented Dickey-Fuller, unit root test, Johansen co-integration and vector error correction model were also used in analyzing the study. The co-integration test results depict the positive relation between the Total Return Indices in BFI sector with the interest rate and money supply. In contrast, the Exchange rate and inflation rate negatively affects the correlate with Total Return Index in the BFI sector. This study also emphasizes that there is no significant short-run causality from macroeconomic factors to Total Return Index (TRI). It is concluded that there is a minimum level of positive impact with interest rate and money supply in the long-run causality, while a negative effect with the exchange rate and inflation rate. The study supports the EMH, which states that it is immediately reflected in share return when new information comes into the market.
Exploring the Rationale for Assuring Integrated Reports and its Impacts on Assurance Practices: A Proposed Conceptual Model
(Department of Accountancy, University of Kelaniya, Sri Lanka., 2021) Herath, R.; Senaratne, S.; Gunarathne, N.
here is a growing demand for external assurance on integrated reporting despite the challenges involved in the assurance process. However, the rationale for obtaining external assurance on integrated reports is mostly unknown, and how it leads to organisational changes is not sufficiently explored. Thus, this study offers a conceptual model to explore the rationale behind obtaining external assurance on integrated reporting, its impacts on internal assurance practices, justifications for modifications made to the internal assurance practices, and its implications on external assurance practices. This conceptual model, grounded on the framing and institutional theories, postulates that companies tend to assure their integrated reports externally as a response to various isomorphic pressures. The external assurance of an integrated report may warrant modifications to companies' current internal assurance practices. Companies make these modifications based on different rationales, which can also have implications on external assurance practices. This paper also discusses how researchers and practitioners can use this model.
Sustainability Reporting and Company Financial Performance: Evidence from an Emerging Market
(Department of Accountancy, University of Kelaniya, Sri Lanka., 2021) Eranga, W. A.; Wijesinghe, M. R. P.
The main objective of this study is to examine the level of compliance to the sustainability practices and investigate the impact of sustainability reporting on the financial performance of Public Listed Companies in Sri Lanka. Sustainability disclosures were measured using social, economic, and environmental sustainability initiatives, and the company performance was measured through Return on Equity (ROE), Return on Assets (ROA), and Return on Sales (ROS). The study becomes original by applying an appropriate index to measure the sustainability reporting compared to the existing indexes used in Sri Lanka and applying the latest GRI 20 guidelines. In addition, the panel data regression model was employed to analyse the data from 2012 to 2019. The results suggest that social sustainability reporting has a significant positive impact on company performance measured through ROE. Henceforth, company managers, directors, and investors should focus more on fulfilling and considering the Social Sustainability Guidelines.
Stock Market Development and Economic Growth: Empirical Evidence from Sri Lanka
(Department of Accountancy, University of Kelaniya, Sri Lanka., 2021) Kengatharan, L.; Vanajah, S.
The financial markets have played a crucial role in the country's economic life for a long time. The objective of this study was to examine the empirical relationship between stock market development and economic growth in Sri Lanka. This study used annual time series data for the period from 1990 to 2018 which were collected from the annual reports of the Colombo Stock Exchange (CSE) and the Central Bank of Sri Lanka. The data were analyzed employing co-integration test, and vector error correction model (VECM). The results of VECM revealed that stock market capitalization, foreign direct investment, and inflation have a significant impact on economic growth, while turnover has not significantly influenced economic growth. The findings of the study have an important implication for the economic policymakers and government of Sri Lanka to enhance economic growth. Further, research can be extended by choosing more periods of data and choosing other indicators of stock market development indicated in previous studies.
The Behaviour of Stock Prices of Sri Lankan Hotel and Travel Sector Companies: A comparison of Civil War and Easter Attack 2019
(Department of Accountancy, University of Kelaniya, Sri Lanka., 2021) Kodithuwakku, K. A. S. S.; Samarakoon, S. M. R. K.
This paper investigates the impact of the Civil War and the Easter Attack 2019 on the Hotel and Travel Sector, employing the Event Study Methodology that is widely used and free from deliberate interferences. The Market Model is applied to calculate the Expected Returns (Rit) by taking daily data for closing share prices of overall forty-one (41) listed companies under the Hotel and Travel sector in Colombo Stock Exchange by the particular event dates while the daily All Share Price Indices (ASPI) are considered as the market return (Rmt). The event timeline is specified considering 41 days' event window and 80 days before the event window for the estimation window. The market model is mainly based on the Ordinary Least Square (OLS) Method for estimating parameters. For analysing data, graphical analysis and t-test analysis are necessarily applied. This study concludes that terrorism is the event capable of creating an unfavourable impact on the value of the Hotel and Travel Sector companies. Especially, the Hotel and Travel Sector has provided no evidence for the semi-strong form efficiency. Further, the Hotel and Travel Sector of Sri Lanka has been adversely affected by Easter Attack 2019, collapsing the favourable economic condition developed for 10 years after the brutal Civil war. Ultimately, this study recommends getting an idea of how to upgrade the mechanism of an efficient market, which provides a platform for investors who trade securities to keep the Hotel and Travel Sector investment flow healthy and stable.
Does Board Structure in Commercial Banks Impact their Performance?
(Department of Accountancy, University of Kelaniya, Sri Lanka., 2021) Jayathilaka, P. G. A. T.; Kumari, J. S.
This study aims to determine the Impact of Board Structure on the Performance of listed Commercial Banks on the Colombo Stock Exchange. This study examines the relationship between Board Structure and Corporate Financial Performance of listed commercial banks using a sample of 12 banks listed on the Colombo Stock Exchange, based on data from 2015 to 2019. Descriptive, correlation and regression analyses were performed to achieve the study objectives. This study uses the company's performance based on the following financial performance measures: return on assets (ROA) and return on equity (ROE) and board structure consisting of board size, female board members, non-executive directors, and frequency of board meetings. Bank capital is used as the control variable in this study. The study's findings suggest that the frequency of board meetings and non-executive directors have a negative and substantial influence on ROE, while the frequency of board meetings has a significant and negative impact on ROA. Additionally, bank capital has a positive and significant impact on ROA. However, the board size, female board members, and bank capital have no significant impact on ROE while board size, non-executive directors, and female board members have no significant impact on ROA of CSE-listed commercial banks. This study contributes to the literature on corporate governance and firm performance by providing the framework that affects the relationship between board structure and firm performance in the context of listed commercial banks. The findings of the study are important for policymakers, investors, regulators, and other bankers of the country. Commercial banks listed in Colombo Stock Exchange would put more attention on the structure and quality of the board to improve their performance. Concerning the study's scope, the present study only included CSE-listed commercial banks. Thus, additional research is needed to study the entire Sri Lankan banking system and 20 business sectors. Further, this study only looked at accounting-based measures such as ROA and ROE. Tobin's Q, for example, can be employed as a dependent variable. Future studies should be done by including cross-border analysis of developing and developed countries.
Key Determinants of Internal Auditors’ Usage of Computer Assisted Audit Techniques in Sri Lanka
(Department of Accountancy, University of Kelaniya, Sri Lanka., 2021) Pathmasiri, B.; Piyananda, D.
At present global business environment is challenged through the rapid pace of technological advancement. Thus, internal auditors are also experiencing with the challenging working environment as most of the functions of the organizations are extensively getting computerized. Auditors are in the view that Computer Assisted Audit Techniques (CAATs) may increase the efficiency and effectiveness of their work. However, recent studies shown that there is a less tendency among auditors (specially the internal auditors) to use CAATs. Thus, this study aims to identify the significant variables affecting to CAATs usage level among internal auditors in Sri Lanka. Further, the study aims to assess the extent to which those variables are affect the CAATs adoption by internal auditors. Important constructs were identified referring to the Unified Theory of Acceptance and Use of Technology (UTAUT) model which is a well-known theoretical model developed in information system field. Data were collected from 75 auditors from both Big 4 and local audit firms who are engaging with the internal auditing of corporations. Data analysis was conducted through descriptive statistics, correlation analysis and multiple regression analysis. Results indicate that Performance Expectancy, Effort Expectancy, Facilitating Conditions and Social Influence have significant positive impact. The results suggest that audit firms shall create a supportive environment while establishing proper policies, investing more on management and technical infrastructures and thereby drive the CAATs usage intention of auditors.
The Level of Effective Internal Control System of Licensed Commercial Banks in Anuradhapura District of Sri Lanka: A Comparative Study
(Department of Accountancy, University of Kelaniya, Sri Lanka., 2021) Vidanage, K. R.; Kumari, J. S.
Globalization has resulted in complex business procedures and activities as a result of global organizations. In the case of banking sector procedures, complicated banking transactions and an increase in banking activity fraud have prompted a focus on the Banking Sector's Internal Control System. Every organization relies on an effective Internal Control System. Accordingly, the purpose of this research is to examine and compare the level of effective internal control systems of state-owned and private domestic commercial banks in the Anuradhapura district. The level of effectiveness of the Internal Control System was assessed using the five components of the Committee of Sponsoring Organizations (COSO) framework (Control Environment, Risk Assessment, Information and Communication System, Control Activities, and Monitoring Activities). Structured questionnaires were used to collect data from fifty respondents from state-owned and thirty respondents from private domestic commercial banks, respectively. Managers (76.25 percent response rate) and secondary officers were the most common respondents (response rate was 23.75 percent). Descriptive analysis with one-sample t-test and independent sample t-test were used to analyze the data. The results of the study indicated that the level of the effective control environment, information and communication systems, and control activities are different between State- Owned and Private Domestic Commercial Banks in Anuradhapura district, whereas the level of effective risk assessment and monitoring activities are not different between State-Owned and Private Domestic Commercial Banks in Anuradhapura district. The findings of this study will help practitioners as a guideline to get the maximum benefit of their Internal Control System.
Employees' Perceptions on Corporate Governance: Empirical Evidence from Sri Lanka
(Department of Accountancy, University of Kelaniya, Sri Lanka., 2021) Fernando, A. T.; Dissanayake, D. H. S. W.; Deshika, N. P. T.
In this study, the primary objective is to investigate employees' perceptions toward the corporate governance practices of Sri Lankan publicly traded companies. The objectives are based on the research problem and emerge through various aspects of corporate governance; components, performance implications, significant issues related to Directors, major issues affected for the company's well-being, and the current status in Sri Lankan Corporate Governance. The quantitative research approach is adopted, and primary data is gathered using a questionnaire survey with a sample of 100 respondents. The questionnaire is addressed to employees in the companies listed in the Colombo Stock Exchange, where the sample was constructed out of the top 50 companies of the highest market capitalization. The analysis is done through a validity using factor analysis and reliability test followed by an analysis of variance (ANOVA) test and chi-square analysis. The results show that employees' perceptions of corporate governance factors differ concerning the changes in the demographical factors. The results generated through this study can be beneficial for employees, managers, practitioners, and students in developing a better understanding of employee perceptions and the concept of corporate governance. Furthermore, this research constructs a scale for measuring employee perceptions of corporate governance, which has significant theoretical and practical implications.
Impact of Integrated Reporting Disclosure Level on Value Relevance of Accounting Information - Evidence from Listed Companies in Sri Lanka
(Department of Accountancy, University of Kelaniya, Sri Lanka., 2022) Basnayaka, B. M. S. B.; Priyadarshini, P. L. W.
The introduction of Integrated Reporting Framework by IIRC addressing the need of governing the disclosure of Non – Financial information in corporate annual reports significantly enhanced the accounting information’s value relevance. However, some studies concluded that disclosures do not enhance the value relevance of accounting information. Hence, the current study validates those contradictory ideas & concludes how impacts accounting information’s value relevance in the Sri Lankan context. For that purpose, the current study selected 38 listed companies considering four years of study periods. The disclosure level measured using “ Disclosure checklist” and accounting information’s value relevance measured using proxy measure of the “firm value” by taking the market price per share six months after each financial year ends. This study found that there is an increasing trend among the listed companies in the selected sample in terms of disclosures. However, the extended price model revealed the increasing level of disclosures negatively impacted on firm value or accounting information’s value relevance. The signaling theory considered in this study justified that corporate report user’s reaction to the signals provided through integrated reports with increased level of disclosures resulted in such negative impact regardless of the quantity of information provided through . Hence, this study contributes to the current literature by justifying the negative impact of disclosures on accounting information’s value relevance from signaling theory perspective.
Does Ethical Banking Hold the Potential to be the Future of Banking?
(Department of Accountancy, University of Kelaniya, Sri Lanka., 2022) Jayasekera, M. A. K. D. S.; Pushpakumari, M. D.
Banks are expected to play a major role in socio -economic and environmental progress of a country; yet, they have by and large neglected their societal and environmental responsibilities, thereby contributing mainly towards economic gains. As such, banks were blamed by civil society for not doing enough for the environment etc. They were also found wanting in providing services to lesser-privileged sections of society, thus unfairly excluding the category from the benefits of basic financial services. The economic downturn exacerbated their plight and exposed the banking sector’s irresponsible attitude. Naturally, there has been a public outcry for banks to act more responsibly in the future. The mood of the public seemed to reflect the yearning for an alternate banking model, in order to discharge social, environmental and economic responsibilities effectively. As a result, an Ethical Banking came to be accepted as an alternative, as this model encompasses all three elements -economy, environment and society. Ethical Banking strives to achieve the triple bottom line - planet, people and profit. These banks envisage financial inclusion and also deliver eco- friendly banking solutions to customers. The main objective of this study is to determine whether ethical banking has the potential to be the future of banking. The significance of the study is also to find out how ethical banking may be adapted as the most suitable banking concept of the future. This study is a desk research, in the form of a literature review. The review identifies that Ethical Banking holds the potential to be the future of banking. The outcome of this research, highlights the importance of banking to be ethically oriented, in order to maintain sustainability for the future.
Effect of Internal Audit on Fraud Management in the Financial Service Sector in Sri Lanka
(Department of Accountancy, University of Kelaniya, Sri Lanka., 2022) Sepala, P. H. N. H.; Herath, H. M. M. N.; Munasinghe, M. A. T. K.
This study aims to study the relationship between internal audits and fraud management. Accordingly, this study, examines the internal audit organizational status, internal audit capabilities, and the contribution of internal audit activities to the fraud management of financial services companies in the Sri Lankan context. The target population for this study was defined as the 80 currently traded financial service sectors firms in Sri Lanka and data collected from systemically important banks namely, Bank of Ceylon, Commercial Bank of Ceylon, Hatton National Bank, People's Bank, Sampath Bank, Seylan Bank and they hold 78 percent of the banking assets and get total of 235 responses were collected from a questionnaire survey. In terms of findings, the results show that internal audit competence, is important predictors of fraud management. Also highlighted is that each financial service sector's concern about internal audit and forensic accounting is a value-added function of an organization and gives more attention to that area in the modern era. Researchers hope that their findings will add to the existing body of work and help close a knowledge gap in regards to emerging countries. The results are important for internal audit managers, internal audit policymakers to empower internal audit function in their organization.
The Impact of Assets Liability Management on the Financial Performance: Evidence from Licensed Commercial Banks in Sri Lanka
(Department of Accountancy, University of Kelaniya, Sri Lanka., 2022) Madhushani, W. I.; Perera, K. H.
The banking sector in Sri Lanka is one of the most dynamic and vibrant sectors of the economy. The banks are influenced by various types of risks and discrepancies which have a direct impact on the profitability of their short-term & long-term operations and sustainable capacity of earnings. The effective Assets Liability Management process will closely monitor and equalize both assets and liabilities and focus on the stability of adverse influences of both risks and discrepancies. The study aims to examine the significant impact of ALM on the financial performance of the licensed commercial banks in Sri Lanka from the financial year 2011 to 2020. Capital Adequacy Ratio (CAR), Non-Performing Loan Ratio (NPLR), Income Diversification Ratio (IDR), Liquidity Ratio (LR) and Operational Efficiency Ratio (OER) were used as asset liability indicators while Return on Assets (ROA) and Return on Equity (ROE) used as financial performance indicators. This study used secondary sources to collect data, such as published annual reports of licensed commercial banks and a central bank web site and selected all 24 licensed commercial banks in the population as the sample. The study used descriptive statistics, correlation analysis, and regression analysis to establish the relationship and effect of the ALM on the financial performance of the commercial banks in Sri Lanka. The findings indicate a significant negative relationship between NPLR and both ROE and ROA. The income diversification had a significant positive relationship with the ROA and also the ROE. Operational efficiency had a significant negative relationship with both ROE and ROA. The level of liquidity had a significant negative relationship with both ROA and ROE. The level of capital adequacy had a significant negative relationship with ROE. There is no significant relationship between CAR and the ROA. Based on the findings, which have the greatest implications for the policymakers who govern the financial performance of the banking sector, regulators who make regulatory requirements related to the banking sector, potential investors who invest in the banking sector and all other stakeholders & future researchers who are interested in the banking sector.
Differential Patterns of Textual Characteristics in the Chairman’s Statement and Company Performance: Evidence from Sri Lanka
(Department of Accountancy, University of Kelaniya, Sri Lanka., 2022) Rosa, S. J. S.; Kawshalya, M. D. P.
Corporate annual reports are continuously getting important in external reporting. The chairman’s statement is one of leading section of annual report that provides information beyond what is required by the regulatory frameworks. It is well-known fact that, those who prepare financial statements have motivation to exercise the content of Chairman’s Statements. In Sri Lanka, since Chairman’s Statement being a prominent requirement of annual report, this research investigates the textual differences of chairman’s statement in companies with higher performance and poor performance in terms of market capitalization. The research question is investigated by examining a range of textual characteristics in the chairman’s statements of 25 companies with highest market capitalization and 25 companies with lowest market capitalization listed in the Colombo Stock Exchange (CSE). The results of the current study indicate that content of chairman’s statement significantly affected by firm’s underlying performance. Since, Chairman’s statement is one of the most widely read section of the annual reports, the findings of this study will provide guidelines and enhance the understandability of the stakeholders who make informed judgments and decisions regarding organizations by reading the chairman’s statement.
Corporate Governance and Corporate Transparency: A Sri Lankan Case
(Department of Accountancy, University of Kelaniya, Sri Lanka., 2022) Ratnayake, D. A. W. M. S. P.; Rajakulanajagam, N.
The main purpose of the research is to explore the impact of corporate governance on the corporate transparency of public listed companies in Sri Lanka. The content analysis was applied to measure the dependent variable, corporate transparency while independent directors, board size, female directors, dual leadership, cross directorship, audit firm size, related party transaction review committee and remuneration committee were used as the variables of corporate governance. This research study covers 100 public listed companies which have been listed on Colombo Stock Exchange in Sri Lanka representing eight sectors and secondary data were gathered from annual reports published on Colombo Stock Exchange for the period from 2018 to 2020. The data analysis was performed through correlation and regression analysis using EViews software. As per the results of regression analysis, it was shown that there is a significant impact of audit firm size and female directorship on corporate transparency. Distinct from the previous empirical research, corporate transparency was measured using a newly updated transparency and disclosure index based on the most recent corporate governance codes in 2017. The outcome of the study gives an insight into corporate governance and corporate transparency to regulators, policymakers, practitioners, researchers and investors by adding value to the existing literature.
CSR Disclosure and Financial Performance in Listed Manufacturing Companies in Sri Lanka
(Department of Accountancy, University of Kelaniya, Sri Lanka., 2022) Dilrukshi, R. M. D. N.
The study was conducted to identify the Corporate Social Responsibility disclosure and financial performance in manufacturing sector in Sri Lanka. CSR disclosure is indicated as independent variable and it was measured by using CSR index. Financial performance identified as dependent variable which measured by using the Return on Equity (ROE) and Return on Assets (ROA). Data was obtained from annual reports websites publications and secondary data was collected from the year 2014 to 2019. The data was analysed using E-views and Pearson correlation. The study applied linear regression model to assess the impact of CSR disclosure and financial performance. Target population comprised of 38 listed companies of which, 30 companies were selected as sample. This data was collected for 5 years each firm giving 150 observations. In this study show that CSR disclosure and financial performance has a positive correlation at 5% significant level. The study concluded further that significant relationship existed between CSR disclosure and ROE. The study recommended that manufacturing firms should have much attention to the importance of CSR and need to pay more attention to increase financial performance.
Financial Distress and Earnings Management: Evidence from Sri Lanka
(Department of Accountancy, University of Kelaniya, Sri Lanka., 2022) Kannangara, H. A. R. D.; Buvanendra, S.
This research's main intention is to scrutinise the impact of financial distress on earnings management in selected Sri Lankan listed firms. This study's sample covers two hundred and seven companies listed on the Colombo Stock Exchange (CSE), excluding the financial sector companies, which were chosen based on the availability of data from 2013 to 2017. Earnings management is approximated based on two strategies: accrual earnings management and real earnings management. The Modified Jones model developed by Dechow, Sloan, and Sweeney (1995) is used to calculate the measure of accruals earnings management. The Roychowdhury (2006) developed combined models of abnormal production costs and abnormal discretionary expenditures are used to assess the amount of real earnings management. The study outcomes indicated that financial distress is positively related to accrual earnings management while being negatively associated with the magnitude of real earnings management. This report's denouement offers greater comprehension for financial practitioners to make optimum financial choices.
Strategic Management Accounting Practices and Organizational Performance of Manufacturing Firms in Kurunegala District
(Department of Accountancy, University of Kelaniya, Sri Lanka., 2022) Nanediri, H. M.; Rajeshwaran, N.; Epitawalage, K. U.
Different types of business strategies and a number of sophisticated strategy-based techniques have emerged to support to meet the challenges of global competition and customer satisfaction. The primary objective of this study is to examine the impact of strategic management accounting practices on organizational performance of manufacturing firms in Kurunegala District. The researcher has included dimensions of the strategic management accounting practices as strategic costing, strategic decision-making, competitor accounting, strategic performance, and customer accounting. A questionnaire was designed using five-point likert scales and distributed using a stratified random sampling technique among 164 Accountants/ Managers of manufacturing firms in Kurunegala District. Data were analyzed using descriptive statistics, correlation analysis, and regression analysis. Based on the findings of the study, it is concluded that there is a positive significant impact of strategic management accounting practices on organizational performance of manufacturing firms in Kurunegala District. As per the result of the study, it is recommended that managers employ strategic management accounting practices to enable them to identify, accumulate, and manage the costs of their activities to ensure accuracy in their decision-making.The findings in this study are supported by other studies in the literature and enable them to implement suitable strategies.