International Journal of Accountancy

Permanent URI for this communityhttp://repository.kln.ac.lk/handle/123456789/29866

Browse

Subject: search.filters.subject.Financial distress

Search Results

Now showing 1 - 2 of 2
  • No Thumbnail Available
    Item
    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.
  • No Thumbnail Available
    Item
    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.