International Journal of Accountancy

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    The Impact of Corporate Governance on Financial Distress: Evidence from Listed Financial Institutions in Sri Lanka
    (Department of Accountancy, University of Kelaniya, Sri Lanka., 2023) Perera, T. M. A. Y. M.; Munasinghe, M. A. T. K.
    This study focuses on the role of corporate governance in predicting financial distress of companies in the finance sector in Sri Lanka. Over the past two decades, several finance sector companies collapsed in Sri Lanka affecting numerous victims with no proper compensation payments. The study aims to unveil the impact of corporate governance on financial distress of companies in the financial sector. A number of key variables included to measure the corporate governance such as board size, board gender diversification, frequency of board meetings, audit quality, board member remuneration, CEO duality, education level of the board members, and board independence. As control variables firm size, profitability, and financial leverage are considered. Financial distress is operationalized through the measures of institutions negative profit, cash flow, or worth for three consecutive years. Data from 54 listed financial institutions in Sri Lanka were collected from 2017 to 2022. Descriptive analysis, Pearson correlation analysis, corporate governance comparison model, and regression analysis were employed for data analysis. The findings indicate that board size, board gender diversification, frequency of board meetings, higher audit quality, education level of the board, board independence, and return on equity have a significant negative impact on financial distress. These findings can help identify at-risk financial institutions, support decision-making for investors and stakeholders, guide the implementation of corporate governance policies, and inform policymakers in developing new governance policies.
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    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.