Commerce and Management
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Item The Relationship between Capital Structure and Ownership Structure: Evidence from Listed Companies in Hotel and Manufacturing Sectors in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya., 2017) Kulathunga, K. M. K. N. S.; Perera, L. A. S.; Anagipura, G. N.This study examines the relationship between capital structure and ownership structure for a sample of thirty-eight listed companies in the hotel and manufacturing sectors in the Colombo Stock Exchange (CSE) in Sri Lanka over the period of 2011-2015. All the secondary data were collected from audited annual reports of each company and data were analyzed using descriptive statistics and regression analysis. Mainly the ownership structure is measured using individual, managerial, institutional and share ownership concentration. Furthermore, the impact of Profit and Tangibility on capital structure is also examined in the study. The results revealed the managerial ownership and ownership concentration have significant influence on the capital structure. In the comparison of hotel sector and manufacturing sector listed companies in CSE we can identify that there is higher impact of ownership structure on capital structure in manufacturing sector compared to the hotel sector.Item The Influence of Managerial Ownership and Firm Size on Debt Policy Evidence from Listed Manufacturing Companies in Sri Lanka(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Abdullah, M.; Ranjani, R. P. C.Introduction: This study looks at how managerial ownership and firm size affect debt policy in listed manufacturing companies in Sri Lanka, using data from the Colombo Stock Exchange (CSE) from 2013 to 2023. It shows that when managers own shares, it reduces conflicts between managers and shareholders, while firm size impacts borrowing capacity and leverage. The research provides useful insights into how these factors influence debt policies in Sri Lanka and fills gaps in existing studies, offering practical guidance for better financial decision-making. Methodology: In this study, a quantitative approach was used, analysing panel data from 10 companies listed on the Colombo Stock Exchange (CSE) over the past 11 years. The main variables examined were managerial ownership (measured by the percentage of shares held by management), firm size (measured by total assets), and debt policy (measured by the debt-to-equity ratio). Multiple regression analysis was conducted, along with diagnostic tests like the variance inflation factor (VIF) and autocorrelation tests, to ensure the reliability of the data and the accuracy of the results. Findings: The study shows that more managerial ownership leads to higher debt because it aligns managers’ interests with shareholders. It also finds that larger companies use less debt, likely due to stronger financial positions. The analysis highlights differences in ownership and firm sizes, and the diagnostic tests confirm the results are reliable.Item The Impact of Capital Structure on Financial Performance: Evidence from Life Insurance Firms Listed on the Colombo Stock Exchange (CSE) In Sri Lanka(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Devindi, G. A. H.; De Zoysa, R. P. S.Introduction: The optimal capital structure levels and capital structure decisions that impacts on how a firm performs have been a great dilemma for many. Capital structure decisions have an impact on the growth and profitability of a firm, as these decisions enable firms to maximize their shareholders' wealth. The major research objective was to determine to identify the impact of capital structure on the financial performance of life insurance companies listed at the CSE in Sri Lanka. Methodology: To justify the research findings, a descriptive research design was used to describe the relationship between the dependent variables and independent variables. The data collected for examination purposes was purely secondary, as it was extracted from the annual reports and financial statements of the listed firms. The target population was all the life insurance firms listed on the CSE. Eight firms were listed and formed part of the study’s population. Data analysis was done via multiple regression analysis, descriptive statistics, and correlation analysis. For the significance level of the hypothesis, a confidence interval of 95 % was used. The analytical model used was financial performance as the dependent variable, taking ROA as the measure. Total debt ratio, debt-to-equity ratio, and leverage were the independent variables. Firm size and growth rate were the control variables. The financial ratios were calculated using a Microsoft Excel spread sheet using data obtained for a seven-year period (2017–2023). Findings: The findings show debt to equity, firm size, and growth rate are all positively and significantly associated with financial performance, while total debt ratio and leverage are not significantly associated with financial performance. The findings reveal that capital structure affects the financial performance of life insurance firms at the CSE. Conclusion: In view of this, it is recommended that life insurance firms that are capable of funding their operations through retained earnings do so and reduce their borrowings, as this will boost their overall performance.Item The Effect of Capital Structure on Firm Performance: Evidence from Listed Diversified Financials Sector Companies in Colombo Stock Exchange: Pre- Crisis vs. Economic Crisis(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Ishanka, G. A. C.; Gunasekara, H. M. A. L.Introduction: This study investigates the impact of capital structure on the financial performance of diversified financial sector companies listed on the Colombo Stock Exchange (CSE) during pre-crisis (2014–2020) and crisis (2021–2023) periods. The objectives of the study are to evaluate the strength of the causal relationship between capital structure and firm performance of the listed diversified financial sector companies between the periods of 2014-2023 and to check whether there is a statistically significant impact between the capital structure and firm performance of the listed Diversified Financial sector companies before and during the economic crisis periods (2014-2023). This study addresses this gap by examining the effect of debt on three key performance metrics: Return on Capital Employed (ROCE), Return on Assets (ROA), and Tobin’s Q. Methodology: The research follows a quantitative approach using secondary data from 27 listed diversified financial firms. Panel data regression will be used for the analysis to evaluate the relationship between capital structure and firm performance, with firm age, size, tangibility, and sales growth as control variables. The economic crisis is incorporated as a dummy variable to assess its effect on firm performance. Descriptive statistics and t-tests are used to identify differences in firm performance between pre-crisis and crisis periods. Findings: The findings indicate a significant negative relationship between the debt-to-equity ratio and all three performance indicators (ROCE, ROA, and Tobin’s Q) and ROA, ROCE are significantly impacted by the Economic Crisis and Tobin’s Q is not impacted by the Economic Crisis. Conclusion: Capital Structure and Firm Performance is a highly discussed topic among researchers. However, studies done on specific sectors are very rare in the Sri Lankan context. Furthermore, the study has incorporated the economic crisis as well. Therefore, this study will provide insights into future research on this topic.Item Determinants of Capital Structure: An Analysis of Pre and During Economic Crisis – Evidence from Listed Consumer Services Sector Companies in Sri Lankan Stock Exchange(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Wijenayake, K. D. D. I.; Gunasekara, H. M. A. L.Introduction: Leverage plays a vital role in optimizing capital structure, and identifying determinants of leverage across varying economic conditions is crucial for strategic financial management. However, limited research focuses on recognizing key determinants of leverage in the consumer service sector in Sri Lanka, creating a gap in understanding its unique leverage dynamics and determinants. To fill this gap, this research endeavor aimed to examine the determinants of financial leverage in consumer service companies in Sri Lanka, with a specific focus on how these determinants behave before and during an economic crisis. Methodology: This study adopted a quantitative methodology to investigate the impact of firm profitability, size, asset tangibility, and growth on leverage, measured by the long-term debt-to-asset ratio. Data were collected from 15 listed Sri Lankan consumer service corporations, selected by size, covering eleven years from 2014 to 2024. Panel regression analysis was performed to identify the effects of these variables on leverage under different economic conditions. Findings: Profitability consistently showed a notable adverse effect on leverage, intensifying during downturns as firms prioritized internal financing to mitigate risks. Asset tangibility positively influenced leverage but diminished in relevance during crises. Firm size positively impacted leverage over the years, but larger firms adopted conservative financing strategies during economic uncertainty, mirroring smaller firms. Growth consistently exhibited an adverse effect on leverage, as growing firms avoided excessive debt, favoring financial stability. Conclusion: The impact of these determinants slightly weakened during crises due to restricted access to external financing. This emphasizes the importance of understanding contextual factors that influence financial decisions during periods of instability. These findings benefit corporate managers and policymakers by enabling more informed strategies for risk management and sustainable finance.Item Analysis of Dependence of Capital Efficiency on Company Size: Evidence from CEE Countries(3rd International Conference for Accounting Researchers and Educators - 2017, 2017) Fashchuk, Y.; Lace, N.; Bistrova, J.Large businesses have certain inherent advantages over smaller companies. Larger companies enjoy the benefits associated with economies of scale and higher penetration into the market and thus experience higher return on their capital. Stronger negotiating power provides larger companies with a competitive advantage in attractive capital and more favorable financial conditions. This research examines the effect of firm size on capital efficiency based on the analysis of companies in Central and Eastern Europe over the period from 2007 to 2014. The size of firms in the study is measured as annual market capitalization and ranges from the largest to small ones. Capital efficiency is measured as return on equity (ROE), return on assets (ROA), return on capital employed (ROCE) and cash flow return on investment (CFROI). Descriptive statistics, correlation analysis and regression analysis were carried out in relation to the objectives of the study. Findings from descriptive statistics indicated that large CEE companies have more equity in their capital structure than small ones that rely mostly on debt financing. Correlation analysis revealed the presence of weak positive relationship between ROA and ROCE and company size. However, regression results suggest that for companies located in Central and Eastern Europe firm size does not provide information in explaining capital efficiency.Item The Relationship between Capital Structure and Performance; Evidence from Selected Sri Lankan Hotels Listed in Colombo Stock Exchange(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Dulaji, D.W.R.K.; Jayamaha, A.The performance of hotel industry is most important to the wealthy of the Sri Lankan economy. Hotels compete in a global economy with infinite opportunities. Hence, hotels need more financial strength in order to run the day to day operations of the business. Capital Structure is one of the main criteria which concerned in financial strength of the hotels. The capital structure of listed companies is most important dimension that every stakeholder is very much concerned. The objective of this study is to identify the relationship between capital structure and performance in the listed hotels in Sri Lanka. Furthermore, this study also aims to indicate what is the most influential factor for capital structure? Short term debt, Long term debt and debt to equity ratio are used as measurement of capital structure. Performance of hotel was dependent variable and it measured by ROA. The study has been used panel data procedure for a sample of 26Sri Lankan hotels listed in Colombo Stock Exchange during 2010-2015.The data for all the variables in the study were abstracted from audited annual reportsThis quantitative analysis used descriptive statistic, regression analysis and correlation analysis to demonstrate relationship between capital structure and performance. This study found that a significant positive relationship between capital structure and performance of hotels listed in CSE. Based on findings, it can be arrived to an overall conclusion that an appropriate mix of capital structure improves the performance of hotels.Item Debt Capital and Financial Performance: A Study of South African Companies(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Magoro, K.M.R.; Abeywardhana, D.K.Y.The purpose of this study is to examine how debt capitals of the listed companies operating in the wholesale and retail sector of South Africa affect their financial performance. The study used a panel data sample of 25 South African wholesale and retail sector companies to examine the impact of debt capital on the financial performance of companies over the 2011-2015 period. Fixed-effects (within) regression model was used on the accounting-based-measures of profitability and financial performance. The study confirms that debt capital, in terms of short-term debt and long-term debt, has a negative impact on the financial performance of wholesale and retail sector companies of South Africa. The findings of this research will help South African wholesalers and retailers to understand the impact of debt capital on company performances. This study will help them make decisions that will ensure profit maximization and reduction of costs associated with debt, and ultimately, maximization of shareholders’ wealth. This study gives special focus to the wholesale and retail sector as it seeks to pioneer the addressing of root causes and reasons of research contradictions in this study area.Item Capital Structure and Profitability: An Empirical Analysis of SMEs in the UK(2015) Abeywardhana, D.K.Y.This study examines the relationship between capital structure and the profitability of non- financial SMEs in the UK for the period of 1998-2008. Using the Two Stage Least Squares, (2SLS) the results show a significant relationship with capital structure and profitability which is negatively related. The size of the firm appears a more important factor that determines the profitability in SMEs in the UK. There is consistent evidence for positive size- profitability relationship. The results of this study have shown that the capital structure of the firm has a significant influence on the profitability of SMEs in the UK. Especially, long-term debt to total assets ratio is negatively related with the profitability and this is an indication that SMEs are averse to use more equity because of the fear of losing the control.Item Capital Structure and Its Impact on Profitability: With Special Reference to Listed Manufacturing and Service Companies in Sri Lanka(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Weerathunge, S.I.This study investigates the relationship between capital structure and profitability of listed manufacturing and service sector companies in Sri Lanka. The study covers six years period from 2009 to 2014 and the sample size is five companies from service sector and twenty companies from manufacturing sector. The study uses return on assets (ROA) and return on equity (ROE) as performance variables. In addition debt equity ratio (DER) and debt assets ratio (DAR) are used as capital structure variables. The relationship between the performance and capital structure variables are analyzed using correlation coefficient and regression techniques. According to the results of this comparative study the relationship between capital structure and return on assets is not significant across all the observations carried out for both manufacturing and service sector except one observation in manufacturing sector. It also shows an insignificant relationship between profitability between debt assets ratio. However, there is a significant relationship in all observations between return on equity and debt to equity in both manufacturing and service sector. Moreover the study reveals that the nature of the industry also determines the effect of capital structure on their profitability. In manufacturing firms, there is a negative significant relationship between return on equity and debt equity ratio while service sector reveals a positive significant relationship between return on equity and debt equity ratio.