Commerce and Management

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Subject: search.filters.subject.Economic Value Added

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    Performance Measurement and Employee Incentive of Manufacturing Companies in Sri Lanka
    (Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Hearth, H.M.D.M.; Rajapakse, R.M.D.A.P.
    Performance measurement system would play a key role in communicating, evaluating and rewarding the achievement of strategic objectives. Many manufacturers have instituted programs to reduce costs and improve their operations but frequently fail to evaluate whether their operational changes achieved their desired results. An active performance measurement system can help to determine areas to improve before invest or money. Organizations adopt performance measurement systems typically classified as financial and non-financial measurements. Some manufacturers even use performance measurements to determine compensation and incentive bonuses. This research attempt to assess the performance measurement in manufacturing companies and plan the employee incentives like the adding the short term cash benefits for basic salary of their. The findings were that company performance has significant relationship with employee incentive in manufacturing companies in Sri Lanka. The findings have shown significant relationship EVA, ROA and ROI with employee incentive. This paper recommends that management must identify the both financial and nonfinancial performance measurement to determinate the employee incentive. This method is important to achieving of business objectives and whether the main purpose of that maximizes their own utility instead the interest of shareholder.
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    Economic Value Added (EVA) Disclosure Practices of Sri Lankan Listed Companies
    (Journal of Finance and Accounting, 2015) Thilakerathne, P.M.C.
    Transparency, disclosures and information sharing with stakeholders, command a considerable degree of value to the accompanying financial statements of any corporate or business enterprise. Investors and stakeholders are increasingly looking at the performance of companies which they have invested their hard earned funds. To meet such expectations, good governed companies do adopt practices which add to enhance the value of financial statements and value to its readers. The ideas of free cash flow and the evaluation of business on a cash basis developed by Modiglaini and Miller (1961) were extended into the concept of the Economic Value Added (EVA) (Stewart and Stern 1971). The traditional financial performance measures have not presented the real shareholder value of an enterprise. Thus, the EVA is one of main evaluation criteria of companies’ commitment with shareholder value maximization. In this context, this research investigated the EVA disclosures in the annual reports of Sri Lankan listed companies. Analyzing annual reports of Sri Lankan largest 85 listed companies over a period of 5 years from 2009 to 2013, the results indicated that 15 numbers of listed companies, as a percentage of 17.65 of the sample disclosed the EVA statement in their annual reports. The study further explored the industry composition, residential status, medium of disclosure, areas of EVA application and extent of EVA related computation prepared and disclosed by EVA reporting companies. Univariate analysis was used to identify the extent of EVA disclosures of listed companies in Sri Lanka and it was found that, existence of significant inconsistencies and irregularities in measurement of EVA and its major components of EVA reporting listed companies. The second part of the study explored that the corporate attributes such as back ground information and financial performance indicators of companies are influenced to the choice of EVA disclosure. Therefore, research performed a comparison of differences between EVA reporting and EVA non reporting listed companies on the basis of their background indicators and financial performance measures. Research employed the two independent sample t-tests to identify the factors influencing to EVA usage and disclosure choice of Sri Lankan listed companies in terms of company size, profitability, leverage etc. Research finds that the EVA usage and EVA disclosure choice of Sri Lankan companies are influenced by the company size, leverage and earnings potential. Further, the study recommends the importance of implementing EVA disclosures as a mandatory requirement for Sri Lankan listed companies.
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    Impact of Working Capital Management Practices on Firm Value
    (2011) Bandara, R.M.S.; Weerakoon, B.Y.K.
    This research study investigated the impact of Working Capital Management Practices (WCMP) on firm value in Sri Lankan companies. Data were gathered from a sample of 74 companies listed in the Colombo Stock Exchange covering seven business sectors for period of 2005 to 2009. Firms? Aggressive Working Capital Management Practice (AWCMP), Moderative Working Capital Management Practice (MWCMP) and Conservative Working Capital Management Practice (CWCMP) were used as independent variables. Firm value measured in terms of Market Value Added (MVA) and Economic value Added (EVA) was employed as dependent variable in the study. The panel regression analysis was employed. The results indicate that there is a statistically significant negative relationship between CWCMP and MVA and it further explains the firms that follow MWCMP yield higher MVA than the firms with CWCMP. Similarly, it indicates that there is a significant negative relationship between AWCMP and EVA, providing further evidence that the firms with AWCMP generate lower EVA than that of the firms with MWCM. Accordingly, the results conclude that the firms following MWCMP improved both MVA and EVA of the firms in Sri Lanka.