Commerce and Management

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    The Relationship between Dividend Policy and Share Price Volatility: A Comparison between the Sri Lankan Banking Sector and Diversified Financial
    (Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Yasappriya, S.D.A.; Sujeewa, G.M.M.
    This study aimed to investigate how dividend policy affects the share price of the Sri Lankan banking sector and diversified financial markets for the period 2018–2022. This study mainly focuses on dividend decisions, as they are considered a significant factor in examining the share price volatility of a company. Shareholders’ wealth directly relates to the value of the firm, measured using the market price of shares. There are thirty (30) banks and sixty-six (66) diversified financial sector companies. The study is based on a sample of twelve (12) listed licensed commercial banks, two (2) listed licensed specialized banks under the banking sector, and the diversified financial sector, which selected eighteen (18) licensed finance companies considering market capitalization. This research used secondary data and data taken from the annual reports during the six years (2018–2022). The independent variables are dividend payout ratio, dividend yield, and dividend per share. The dependent variable is share price volatility. Panel data was used to analyze the impact of dividend policy on firms’ share price volatility in the Sri Lankan banking sector and the diversified financial sector. Dividend payout ratio, dividend yield, and dividend per share have a significant positive impact on share price volatility in the banking sector. Dividend payout ratio, dividend yield, and dividend per share have a significant positive impact on share price volatility in the diversified financial sector.
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    Behavioral Intention to Use Forensic Accounting Services for the Detection and Prevention of Frauds in Sri Lanka
    (Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Nisansala, H.A.; Sujeewa, G.M.M.
    This study investigates the factors that influence the behavioral intention to use forensic accounting services in the detection and prevention of fraud in Sri Lanka. The research was motivated by the underutilization of forensic accounting services, an essential and effective fraud detection and prevention method. The low usage of this service by companies in Sri Lanka and worldwide has been pointed out as a contributing factor in the escalation of fraud. The organizational intention to use professional services including forensic accounting services has not been researched previously. The study uses a quantitative approach to its research methodology. The Theory of Reasoned Action (TRA), Theory of Planned Behavior (TPB), Health Belief Model (HBM), and Hierarchy of Effects Model (HOE) were found to be significant to the study of behavioral intention during the second part of the literature review. Quantitative data is gathered from Chief Financial Officers (CFOs), Business Owners/CEOs, Internal Auditors, Finance Managers, Compliance Officers, Risk Managers, and Audit Committees of Sri Lankan companies during the third phase. The multiple regression approach using ordinary least squares was used to examine quantitative data. The findings support the significant positive impact of awareness, stakeholder pressure, and threat perception factors on the behavioral intention to use forensic accounting services, as well as the negative impact of financial costs and legal factors. This research contributes theoretical as well as practical. The integrative conceptual model, which has effectively integrated factors from the TRA, TPB, HBM, and HOE in examining the behavioral intention of using forensic accounting services, is the theoretical contribution. There has never been an investigation into the company's intention to use professional services, such as forensic accounting services. Additionally, this study is the first to use HOE's awareness and HBM's risk perceptions in an ethical decision-making model. The study's practical implications allow the government of Sri Lanka, professional associations, board of directors, stakeholders in the organization, and accounting firms to gain a better understanding of the reasons behind organizations' resistance to using forensic accounting services for fraud detection and prevention. It will also enable them to create workable techniques and marketing plans to raise forensic accounting services' profile, obtain acceptance, and eventually be used in the battle against fraud.
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    The Impact of Environmental Management Practices on the Organizational Performance of the Hotel Industry of Western Province in Sri Lanka
    (Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Mahakumara, V.R.; Sujeewa, G.M.M.
    This research article was designed to explore the Environment Management Practices (EMP) performed by the Western Province hotels in Sri Lanka and to identify the relationship that these practices have with the organizational performance of hotels. Tourist hotels registered with the Sri Lanka Tourism Development Authority (SLTDA) during the period from 2018 to 2022, with star ratings ranging from one star to five stars, have been selected as the sample for this study from which data was collected primarily by means of a questionnaire. This study was also expected to find out which Environmental Management Practice is significantly used by the Western Province hotels in Sri Lanka. This study follows a Quantitative Approach (QA) and data has been collected from tourist hotels registered with SLTDA, that have obtained star ratings ranging from one star to five stars. Data was collected through a survey questionnaire then analyzed using descriptive statistical techniques. The results of this research reveal that there is a statistically significant positive relationship between the independent variables of Waste Reduction, Water and Energy Efficiency, Environmental Communication, Education and Training on Environmental Awareness, and Managerial Knowledge of Environmental Protection. This leads to the conclusion that there is a positive impact of hotels implementing Environmental Management Practices on the Organizational Performance of the Hotel.
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    The Effect of Liquidity Management on Finance Distress in Listed Non-financial Companies in Sri Lanka
    (Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Madadeniya, M.G.P.M.; Sujeewa, G.M.M.
    This study aims to evaluate the effect of liquidity management on financial distress in listed non-financial companies on the Colombo Stock Exchange (CSE) under the highest market capitalization. The sample of this study includes annual reports of 50 listed non-financial companies in Sri Lanka for five years from 2019 to 2023. This research used secondary data; data taken from the annual reports. The independent variable is liquidity management, which consists of current ratio management, quick ratio management, solvency ratio management, and cash coverage ratio management. The current ratio, quick ratio, solvency ratio, and cash coverage ratio measure these variables. The dependent variable is financial distress, which is measured by Altman’s Z-score model. Ordinary Least Square Regression was used to analyze the information in the reports to recognize liquidity management's impact on financial distress. The study concluded that the current ratio, quick ratio, and solvency ratio have a significant negative effect on financial distress. In contrast, the cash coverage ratio has a negative non-significant effect on financial distress. Based on the findings, it was recommended that listed companies implement accurate liquidity management methods to prevent bankruptcy. It was concluded that liquidity management is a precondition for financial distress in the listed non-financial corporations in Sri Lanka.
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    Assessing the Impact of Skills on the Effectiveness of Internal Audit: Empirical Evidence from Sri Lanka
    (Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Kavinda, S.J.M.I.; Sujeewa, G.M.M.
    In the dominion of Sri Lankan audit practices, this research endeavors to dissect the elaborate interaction between professional, interpersonal, technical, and audit-specific skills and their influence on the effectiveness of internal audits. The study draws upon a diverse sample of 120 participants from varied sectors such as hotels, manufacturing, banking, and audit firms to precisely assess the connection between these skills and the effectiveness of internal audit functions. Utilizing a strong conceptual framework where these skills are suggested as independent variables and internal audit effectiveness as the dependent variable, the research crafts and empirically evaluates four hypotheses. These hypotheses scrutinize the extent to which internal auditors’ skills possess the necessary to influence audit functions effectively. Findings explain a significant positive correlation between professional factors and internal audit effectiveness. This underscores the paramount importance of cultivating and honing professional skills such as accounting expertise and regulatory acumen to bolster audit performance. The study explained a persuasive link between interpersonal skills, and technical and audit skills with internal audit effectiveness, highlighting the instrumental role of effective communication, team collaboration, and relationship-building capabilities in enhancing audit outcomes. The implications of these findings extend beyond theoretical dimensions and concrete the way for actionable recommendations. The study underscores the imperative for technical skill enhancement programs, continuous skill assessments, and cross-industry collaborations to fortify the skill arsenal of Sri Lankan internal auditors.
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    Effect on Internal Control Functions in Preventing Employee Frauds in the Banking Industry Sri Lanka
    (Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Lasara, J. Y.; Sujeewa, G.M.M.
    This study aims to examine the impact between internal control functions and fraud Prevention. Accordingly, this study examines the effect of the control environment, control activity, risk assessment, information and communication, and monitoring on fraud prevention in the banking industry Sri Lankan context. The study's target Population consisted of the 80 financial service companies presently trading in Sri Lanka. Data from systemically important banks, including Bank of Ceylon, Commercial Bank of Ceylon, Hatton National Bank, People's Bank, Sampath Bank, and Seylan Bank, which together hold 78 percent of the country's banking assets, were gathered through a questionnaire survey, resulting in a total of 235 responses. According to the findings, Monitoring activities have the most influence on preventing fraud in Sri Lanka's banking sector and are a key predictor of preventing fraud. In terms of findings, the results show that all five components have a significant positive impact on employee fraud prevention in the banking industry in Sri Lanka and are important predictors of fraud prevention. It is emphasized that the use of the COSO Framework in each financial sector is considered a valuable function of an organization, specifically to prevent fraud, it has become increasingly vital in the modern era, characterized by complex financial products, digital transactions, and stringent regulatory requirements. The researchers anticipate contributing to the current corpus of research and address the lack of knowledge about rising nations. The findings have relevance for internal audit managers and policymakers since they may enhance the effectiveness of the internal audit function inside an organization.
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    The Impact of Internal Controls on Detection, Control, and Prevention of Asset Misappropriation in Business Entities of Western Province
    (Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Jayarathna, A.A.H.; Sujeewa, G.M.M.
    Fraud and corruption are serious problems facing not only Sri Lanka but the whole world. A powerful strategy that organizations use to deal with that problem is internal controls. Many Studies have been conducted in various countries on how this internal control affects corporate fraud involving misappropriation of assets. This study aims to examine how the internal controls affect the detection, control, and prevention of asset misappropriation in business entities in western province in Sri Lanka. A business entity in the Colombo district has been used to represent the population of entities in western province of Sri Lanka. Data were collected through a self-administered questionnaire distributed among internal auditors who had audited organizations in the Western Province. Based on the results of the research, it was confirmed that all components significantly affect asset misuse, detection, control, and prevention in Sri Lankan organizations. It has also been found that the component with the highest impact is the information and communication component, followed by the monitoring activities, control environment, and risk management components, respectively. This study found that control activities were the component with the least impact. This study has recommended that all organizations can minimize asset underutilization by using the internal controls effectively and efficiently.
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    The Effect of Internal Controls on Financial Performance; Special Reference to Western Province in Sri Lanka
    (Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Dharmasena, R.I.M.D.N.; Sujeewa, G.M.M.
    The secret to SMEs' success is the effective management of their financial performance, which is a complex undertaking. The creation and maintenance of a strong internal control framework become crucial tools in this endeavor. The purpose of the study was to establish the effect of internal controls on financial performance; special reference to Western Province, Sri Lanka. The study was guided by the following research questions; To what extent does the control environment influence the financial performance of SMEs in Sri Lanka? How does risk assessment affect the financial performance of SMEs in Sri Lanka? What is the impact of control activities on the financial performance of SMEs? How does information and communication impact the financial performance of SMEs in Sri Lanka? What is the relationship between monitoring and the financial performance of SMEs in Sri Lanka? The study specifically investigates the influence of internal control components, including the control environment, risk assessment, control activities, information and communication, and monitoring, on the financial performance of SMEs. Financial performance is measured using Return on Assets (ROA). The study employs a cross-sectional research design, which limits the ability to establish causal relationships. While it can identify associations between internal controls and financial performance, it may not conclusively demonstrate causation. Assistants, Executives, and Managers at SME make up the target population for this study, which is only focused on the Western Province, Sri Lanka. A sample length of 100 respondents has been chosen for this examination. For the purpose of gathering survey data, this study uses a quantitative strategy over a cross-sectional time period. Data was systematically gathered using a structured questionnaire with Likert scale questions. Primary data was collected using a structured questionnaire. The Study used SPSS 26 to analysis the data. Quantitative data was analyzed, and the output presented using descriptive statistics namely: mean, standard deviation, percentages. A multiple linear regression model was used to assess whether internal controls have an effect on the performance of SMEs. the data presentation and analysis of the study which covered the exploratory data analysis, illustrations of demographic factors and descriptive statistics of the sample. Validity and reliability of data has been tested. Further this chapter elaborated the correlation coefficient between Internal control systems and financial performance in Sri Lankan SMEs and evaluated the regression of the model using statistical means to arrive at the outcome to test the hypotheses.
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    The Influence of Whistleblowing System toward Fraud Prevention in Sri Lanka: With Special Reference to Internal Auditors of Sri Lanka
    (Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Athukorala, A.U.H.E.; Sujeewa, G.M.M.
    The problem of fraud has never been fully resolved. The rise of an increasingly complex business world has contributed to the emergence of fraudulent acts such as corruption, misappropriation of assets, and financial statement fraud. This fraud happens across a range of industries, including the public, private, and even community organizations. Fraud often occurs because the perpetrators aim to profit, either for themselves or a group. The economic impact of fraud has become more significant, with companies losing billions of dollars each year to fraud. This has led to increased pressure on organizations to improve their fraud detection and prevention efforts. A whistleblowing system is an effective mechanism that allows employees or other individuals to report misconduct or illegal activities within an organization without fear of retaliation. Numerous empirical studies have been conducted to investigate the impact of whistleblowing systems on fraud detection and prevention. However, researchers have paid too little attention to identifying the whistleblowing system for fraud prevention in the Sri Lankan context. This study aimed to examine the implementation of whistleblowing mechanisms and fraud prevention and to ascertain how fraud prevention is impacted by the whistleblower system at private sector companies in Sri Lanka. The study focuses on internal auditors employed by private companies in Sri Lanka. Data were collected through the distribution of questionnaires to internal auditors in the selected private companies in Sri Lanka. In this study, descriptive analysis, correlation analysis, multicollinearity, normality, homoscedasticity, and regression analysis are used to analyze the data. Data coding and analysis are performed using SPSS software. Research results suggest that there is a significant positive impact of the whistleblowing system on fraud prevention in Sri Lankan private sector companies. The findings of this study contribute to enhancing whistleblowing applications and combating fraud in companies.
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    Examine the External Auditors’ Fraud Tendency Perception in Sri Lanka
    (Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Amarasingha, J.M.N.M.; Sujeewa, G.M.M.
    This study considers external auditors’ fraud tendency perception as the dependent variable, Pressure (PRE), Opportunity (OPP), Rationalization (RAT), Competence (COM), Arrogance (ARR), and Collusion (COL as the dependent variable. This aim is to measure the level of external auditors’ fraud perception, the association between components of fraud hexagon to fraud perception. The population is people who are participating in public practice including senior auditors, supervisors, managers, and partners who engage in external audit functions in Big four and non-Big four audit firms in Sri Lanka. An online survey was used to collect the data, which was then examined using the IBM Statistical Package for Social Sciences (SPSS 23). The data were mostly described using descriptive and inferential statistics. The results indicate that external auditors' perception of fraud triggers does not fully support all six components of the fraud hexagon theory. Among the six components, Opportunity, rationalization, and competence are found to have a significant influence on the perception of fraud tendency. However, other three components do not have a significant impact. The Hexagon idea has received less academic attention because it is a more recent theory. Studies on auditors' perceptions of fraud have been few despite the fact that many new fraud hypotheses have been studied, the majority of which concern industries like manufacturing and banking. While most studies have focused on examining the components of fraud, fewer studies have studied the tendency for fraud to occur. Numerous studies on this battle from various perspectives have been undertaken by various nations. There are, however, not many studies on this topic that apply to Sri Lanka. Due of this, it is necessary to look at the Sri Lankan background. The variables influencing the external auditor's judgment of fraud tendencies on the link between parameters connected to fraud and perceptions of fraud have also been the subject of conflicting findings in some international studies. The primary aim of the study is to determine the impact of the elements of the fraud hexagon theory on the fraud perception of Sri Lankan external auditors. According to that, the researcher has investigated the most important factors affecting external auditors’ fraud tendency perception. Hence, this chapter consists of the background of the study, problem statement, research questions, and objectives. Subsequently, this chapter highlights the importance of the study and provides a brief overview of the research methodology and the extent of the study.