Commerce and Management
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Item Corporate Governance and Stock Liquidity: Evidence from Listed Companies in Sri Lanka(Department of Finance, University of Kelaniya., 2024) Weerasinghe, W. S.Purpose: This study aims to investigate the relationship between corporate governance and stock liquidity in listed companies in Sri Lanka. Design/Methodology/Approach: Corporate governance was evaluated using an index constructed of the board of directors, audit committee, remuneration committee, nomination committee, related party transaction review committee, frequency of meetings, and gender diversity. Stock liquidity was measured using the Amihud illiquidity ratio. A Quantitative research study was performed based on the data collected from 100 Sri Lankan listed companies excluding companies in the Banking, Finance, and Insurance sectors due to its inherent nature of being highly regulated. Findings: It was found that the mean (median) values of corporate governance of Sri Lanka are 0.706 (0.714) and the mean (median) values of stock illiquidity are 0.839 (0.379). The results of the correlation and regression analysis revealed that a weak association between corporate governance and stock liquidity relationship. Therefore, this study concludes that corporate governance has no significant impact on stock liquidity. Nonetheless, this study analyzed a limited sample of 100 companies, focusing primarily on board and its committee-related corporate governance attributes. Originality: This study provided new insights into relationship between corporate governance and stock liquidity which has a practical significance for managers, shareholders, investors, traders, financial analysts, and policy makers in Sri Lanka. It introduces a novel corporate governance index tailored specifically to Sri Lankan companies highlighting its potential improve the stock liquidity at both the company and market levels which will ultimately lead the country towards economic growth.Item Board Characteristics and Intellectual Capital Disclosures: Evidence from Sri Lanka(Department of Finance, University of Kelaniya., 2021) Chandraratne, K. A. D. P. M.; Pathirawasam, C.; Mohamed, M. S.Purpose: The purpose of this study is two-fold. First, to examine the state of intellectual capital disclosures. Second, to investigate the relationship between board characteristics and intellectual capital disclosures. Design: This study selected thirty non-financial listed companies with the highest market capitalization from the Colombo Stock Exchange in Sri Lanka. An intellectual capital disclosure index comprising 61 items was developed to understand the level of intellectual capital disclosure in the selected companies. Panel data analysis techniques were applied to test the proposed hypotheses. Findings: Results indicated that role duality and proportion of female directors have a significant and positive impact on intellectual capital disclosures. Firm leverage was found to have a significant and negative effect on intellectual capital disclosures. Insufficient empirical evidence between other corporate board characteristics and intellectual capital disclosure in Sri Lanka may be attributed to a non-mandatory corporate disclosure environment. Originality: This is among the few studies to examine the link between corporate governance and intellectual capital disclosures employing panel data in Sri Lanka. However, a discourse on the role of corporate governance and corporate disclosures is warranted in a small island developing economy with a fragile financial system like Sri Lanka. Future Research Directions – The study calls for more studies to investigate the relationship between corporate governance and intellectual capital disclosures in the case of Sri Lanka by employing data from different industries for longer periods.Item Corporate Governance Practices and Their Impacts on Corporate Risk: Evidence from Sri Lanka.(Faculty of Commerce and Management Studies, University of Kelaniya., 2020) Sameera T.K.G.The cost of failure of a single corporate has a fatal impact on the economy. In addition to the macro-economic conditions leading to corporate collapse, management is responsible for developing and implementing a sound system of risk management and internal control in order to avoid such collapses. As a result, discussions on governance and risk have reached an unprecedented level for academics and practitioners. Moreover, risk exposure and management are increasingly becoming the foremost functions of modern business enterprises. However research that integrates corporate governance and risk has been limited. This study examines therefore the impact of corporate governance practices on corporate risk of listed companies in the Colombo Stock Exchange in Sri Lanka. The Board structure, Board Independence and Board procedures were considered as independent variables, whereas, corporate risk as dependent variable. The corporate risk represented the financial, operational and market risks faced by the companies. Furthermore the study used data from a sample of 64 listed companies for 5 years from 2014 to 2018 and employ panel regression to uncover the relationship that exists between these variables. The independent sample t-tests was used to test whether there was a statistically significant difference exist between the corporate governance practices of distress and non-distress companies. The results show that the corporate governance practices of distress companies was significantly lower than that of non-distress companies. The findings of the regression results suggest that Board independence was significantly and negatively impact on corporate risk. However, Board structure and Board procedures have no significant impact on corporate risk. The study therefore, concludes that the increased representation of independent non-executive directors of the board contributed to the significant decrease of corporate risk.Item Determinants of Board Size and Its Composition: Evidence from Nigerian Manufacturing Sector(Faculty of Commerce and Management Studies, University of Kelaniya., 2020) Mustapha Y. I.; Nafiu A. I.; Abdul F. A.; Omolekan, O. J.This paper examines the determinants of corporate board size and its composition in Nigeria using listed manufacturing firms as study area. The objective of the paper is to determine the effect of firms’ characteristic on board size. The study collected secondary information from thirty listed manufacturing firms that met the requirement for selection as sample between 2006 and 2018 through Nigerian Stock Exchange’s Fact Books. Multiple regression analysis was used as analytical technique. Using panel data OLS pooled method of estimation, the paper found that firm size, profitability, and growth opportunities are strong determinants of board size. Similarly, the results indicated that CEO-duality and profitability were determinants of board composition in the study. It is recommended that appointment into corporate board should be based on proven demonstration of high level of expertise, merit and due consideration to firms’ characteristics instead of mundane factors that would not enhance shareholders’ wealth.Item Impact of Corporate Governance on Intellectual Capital Efficiency - Evidence from Sri Lankan Banking Sector(Journal of Accountancy and Finance, 2024) Weerasinghe, I.K.H.N.; Thilakasiri, K. K.The study explores the intricate link between Corporate Governance (CG) factors and Intellectual Capital (IC) efficiency within the Sri Lankan banking sector. It delves into the impact of variables such as Board Size (BSIZE), Board Activity (BACT), Board Independence Composition (BIND), Audit Committee Size (AUDS), and Frequency of Audit Committee Meeting (AUDM) on Intellectual Capital, treating the latter as the dependent variable. For the five years between 2018 and 2022, the research technique comprises a thorough investigation of banking sector company in Sri Lanka, excluding three banks. The goal of the study is to obtain understanding of the connection between CG variables and IC efficiency through secondary data analysis using data from stock market transactions and audited financial statements. The main analytical tools are descriptive statistics and regression modeling, which enable a detailed comprehension of the relationship between CG dynamics and IC efficiency. Through a detailed examination of these variables across time and across different financial institutions, the study seeks to illuminate the ways in which CG practices impact the creation and application of IC in the banking industry. In the conclusion, the results of this study are important not only for scholars but also for professionals and decision-makers in the banking sector in Sri Lanka. The study provides significant insights that can guide strategic decision-making, governance reforms, and resource allocation within banking institutions, ultimately leading to improved organizational efficiency and long-term sustainability. This is achieved by revealing the complex relationships between Corporate Governance and Intellectual Capital.Item The Impact of Corporate Governance on Earnings Management in Listed Manufacturing Companies in Sri Lanka(4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Karunarathne, J.P.J.H.; Rathwatta, G.M.H.P.K.Earning Management is the very important indicator to any organization as some managers manipulate earnings and the financial statements do not present according to the true and fair value. This Study objective is to analysis the relationship between corporate governance and earning management in listed manufacturing companies in Sri Lanka. C.E.O Duality (CD), Board Independence (BDIN), Board Members with Financial Expertise (BDFX), Number of Board Meeting (BDMEET), Board Size (BDSIZE) used as the Main indicator of Corporate governance and Firm Size (SIZE) and Return on Asset (ROA) used as control variables. Then, Discretionary Accrual (DA) is applied as the Earning Management indicator. The study used secondary data of all Manufacturing Company from 2013 to 2017. Data were analyzed using regression analysis and E-Views packages. The findings of the study showed that CEO duality and board size are negatively and insignificantly associated with earnings management. That depict firms which have two separate positions for Chief Executive Officer and Chairman are more effective in reducing earning management than firms which do not. Also, firms with large number of directors have lessor amount of earnings management than firms with small board sizeItem The Impact of Internal Corporate Governance on Convergence of IFRS: Evidence from Sri Lanka(4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Harshana, R.D.U.; Perera, H.A.P.L.The convergence of International Accounting Standards (IAS) with International Financial Reporting Standards (IFRS) is an important debate among standards setters, policy makers, regulators, professional bodies and companies worldwide. The objective of this research is to examine the impact of internal corporate governance on convergence of International Financial Reporting Standards (IFRS) and to measure the impact of individual corporate governance factors to the convergence of IFRS. Changes of equity during the year were used as the dependent variable of the model and no of financial and non-financial variables were used as independent variables. Financial and non-financial data were collected from annual reports published by the listed manufacturing companies in Colombo Stock Exchange (CSE) during the period of 2009 to 2015. This six (6) year period was divided into two categories as before and after convergence of IFRS. All the manufacturing sector companies were selected as the sample of the research. Due to the unavailability of data, there were 29 companies used for the final analysis. Panel data regression was used to analyze data using E-views software. The results of the study revealed that, effective internal corporate governance mechanism helps companies more aligned with convergence of local accounting standards to IFRS and thereby provide high quality financial information to users of the informationItem Impact of Corporate Governance on Banking Performances(4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Nishshanka, N.A.S.S.S.; Rathwatta, G.M.H.P.K.Corporate governance is considered to have significant implications for the growth prospects of an economy. Good corporate governance practices are regarded as important in reducing risk for investors, attracting investment capital and improving the performance of companies. However, the way in which corporate governance is organized differs between countries, depending on their economic, political and social contexts. The main objectives of this study are to find out the relationship between corporate governance and banking performance and also find out the impact of corporate governance on banking performance. This study focused on four aspects of corporate governance namely; Board Size (BS), Board Diversity (BD), Outside Directors Percentage (OSDP), Board Meeting Frequency (MF) & Audit Committee Meeting Frequency (AM). Banking performance has been measured through Return on Assets (ROA). The study used secondary data of 11 commercial banks covering the period of 2008 to 2017. Data were analysed using regression analysis and E-Views packages. The empirical results of the present study indicate that there is positive relationship between Outside Directors Percentage (OSDP), Board Meeting Frequency (MF), Board Size (BS), and Audit Committee Meeting Frequency (AM) with Return on Assets (ROA). Further Board Diversity (BD) has a negative impact on Return on Assets (ROA). This study will be benefited to all investors other than the bank sector investors.Item The Impact of Board Characteristics on Sustainability Reporting: Empirical Evidence from Sri Lankan Firms(4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Dimuthumali, H.G.K.S.; Rajapakshe, R.M.D.A.P.At the present scenario, Sustainability Reporting plays vital role in financial reporting as it is crucially impact on the growth and continuous development of a firm in certain and equity market. There are several factors influenced on sustainability reporting. Among them board characteristics impact more as disclosure decisions are one of the primary control functions of the board. The purpose of the research is to explore the role played by the board of directors in corporate sustainability reporting among the listed companies in Sri Lanka. Research problem is based on the board characteristics and it is impact on the detailed sustainability reporting. Data collected from the sample of 60 Sri Lankan listed companies over a period of four years (2014-2017), representing practically four business sectors which represent the highest number of companies under sector classification of CSE in 2017. Board size (BS), Board independency (BIND), Dual leadership (DL), Board with female directors (BFD), Board ethnicity (BE) and Impact of ownership structure (OS) were used as the board characteristics. Binary logistic regression is the method which used to analyze the research data. The results reveals that firms which follow a detailed sustainability reporting have larger boards, more female directors and higher portion of independent directors. This study also found that dual leadership, board ethnicity and board ownership have no influenced on detailed sustainability reporting. This study contributes to provide value addition into the existing literature on this subject by providing sufficient evidences to fill up the gap in the existing literatureItem The Use of Corporate Governance in Predicting Corporate Failure of Listed Companies in Sri Lanka(4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Randika, R.W.M.K.M.; Wijekoon, W.M.H.N.The main purpose of this study is to investigate the relationship between corporate governance variables and corporate failure of listed companies in Sri Lanka. In modern business world sudden failure of corporation became one of most discussed topics and it is a common problem of both developing and developed economies. It is claimed that corporations are failed due to poor corporate governance systems. An analysis of literature revealed that only few studies were carried out on corporate failure prediction in Sri Lanka and such studies were based solely on financial ratios. Therefore, this study addresses the empirical gap exists in the local context. The study used logistic regression analysis to a data set of 58 matched pairs of failed and non-failed companies listed in the Colombo Stock Exchange in Sri Lanka over the period 2008 to 2017. Seven corporate governance variables were used for prediction of corporate failure such as board size, CEO duality, Outside directors, Audit opinion, Presence of audit committee, director’s remuneration, foreign ownership. The results of the study revealed that CEO Duality alone has significant positive impact to the failure of the corporations in the first year before failure and two years before failure. In three years before the failure both CEO duality and outside directors has significantly impact to the prediction of corporate failure. Therefore, results of this study can assist investors, managers, shareholders, financial institutions, auditors and regulatory agents in Sri Lanka to forecast corporate failure of listed companies
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