International Journal of Accountancy

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Subject: search.filters.subject.Colombo Stock Exchange

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    Interrelationships Between Non-Financial Perspectives of Balanced Scorecard: Evidence from Sri Lankan Public Listed Companies
    (Department of Accountancy, University of Kelaniya, Sri Lanka., 2024) Perera, P.R.M.R.; Kariyawasam, A.H.N.
    The objective of this study is to examine the interrelationship among the non-financial perspectives of the Balanced Scorecard. Out of 285 PLCs listed, 102 PLCs in the Colombo Stock Exchange; Sri Lanka have responded in this study and data collected with a standard questionnaire. Respondents were from the managerial capacity of the companies. The questionnaire captures all aspects that construct each non-financial perspective of the Balanced Scorecard using 5-point Likert scale. Two factors under each non-financial perspective, totaling to six factors were found through a factor analysis and the factors were used in finding the interrelationship between non-financial perspectives. Results reveal that the learning and growth perspective has a relationship with the internal business process perspective where both internal oriented learning and external oriented learning are highly correlated with collaborative process efficiency. The relationship between internal business process perspective and customer perspective is evidenced by the strong correlation that customer satisfaction has with both product delivery process efficiency and collaborative process efficiency. Learning and growth perspective reveals a relationship with the customer perspective having internal oriented learning strongly correlated with customer satisfaction. This study contributes to the body of knowledge by confirming the underlying assumption in the Balanced Scorecard and notifying firms that have or haven’t adopted the Balanced Scorecard approach with a general conclusion to focus on the non-financial perspectives by understanding the interrelationship between them.
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    The Mediating Effect of Profitability on The Relationship Between Working Capital Management and Shareholder Wealth: Evidence from Colombo Stock Exchange
    (Department of Accountancy, University of Kelaniya, Sri Lanka., 2024) Abeysinghe, A. M. N. D.; Wanigasekara, W. A. D. K. J.
    The management of working capital plays a crucial role in enterprises and has a substantial influence on the wealth of shareholders. Working capital management, profitability, and shareholder wealth have emerged as significant subjects of discussion in contemporary discourse, since they have been acknowledged as expansive areas of study. The primary aim of this research was to investigate the mediating role of profitability in the association between working capital management and shareholder wealth, focusing specifically on empirical data from the Colombo Stock Exchange. The working capital management was measured using Current Ratio, profitability was quantified by Return on Investment and shareholders’ wealth was measured through Tobin’s Q. Data for the research was collected by examining the annual reports of 100 non-financial firms listed on the Colombo Stock Exchange. Upon conclusion of the study, it yielded findings that addressed the research inquiries, so signifying the successful attainment of the research aims. This paper examines profitability, working capital management, and shareholder wealth in Sri Lankan businesses. A weak, but significant association between working capital management and all factors was found based on the correlation analysis. It was found a significant impact of working capital management on shareholders' wealth. Further, the findings revealed a significant impact of working capital management on profitability and a significant impact of profitability on shareholders’ wealth. Finally, it was evidenced that profitability plays a partial mediation role on the relationship between working capital management and shareholders’ wealth.
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    Factors Affecting Share Prices of Finance Companies in Sri Lanka
    (Department of Accountancy, University of Kelaniya, Sri Lanka., 2023) Pandigamage, N. G.; Ranaweera, D. C. P.
    The price of a share is influenced by a variety of internal and external factors. Internal factors are those dependent on the company, such as return on equity, and earnings per share. The external influences include raw material pricing, economic trends, inflation, investor confidence, interest rate, exchange rate, and other factors that are beyond the firm's control. Both kind of factors may influence the investor’s future expectations and risk-taking ability, and as a result that they take their investment decisions. This study aimed to examine the factors affecting share prices in finance companies in Sri Lanka for the period of five years, from 2017 to 2022. For that purpose, researchers selected the independent variable as the share price, while the dependent variables are earnings per share (EPS), return on equity (ROE), interest rate, inflation, and exchange rate. The researchers collected data from the CSE data library, Company annual reports, and Central Bank Reports. The STATA was used to analyze the data in this study. Descriptive Statistics, Correlation Analysis, Regression Analysis were performed as analytical tools. The findings highlighted that EPS and inflation positively impact raw material pricing, while ROE, interest rate, and exchange rate showed a negative impact. But only EPS shows a significant impact on the raw material pricing. This study suggested to take at least 10 years duration for data collection and consider more internal and external factors.
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    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.
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    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.
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    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.