Graduate Studies
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Item Microfinance and poverty alleviation: Case of the Northern Province in Sri Lanka(Faculty of Graduate Studies, University of Kelaniya, 2015) Sivatheepan, B.; Peter, S.The paper evaluates the impact of microfinance on poverty alleviation in the Northern Province of Sri Lanka. After being the central area of conflict over the last three decades, the cessation of hostilities has provided the residents of the province the opportunity to rebuild their lives and recommence their economic livelihood. Since many residents have limited access to funds, the microfinance product has become a key component in the revival of the economy in the region. Data was collected and analyzed in 2013, through a structured questionnaire, from all five districts in the Northern Province where microfinance is offered by banks and a large number of private financial institutions all competing to offer the product as the returns and risk on the product are deemed very attractive. The conceptual model associates beneficiaries‘ income and living standards with the key dimensions of the microfinance product which include interest cost, credit availability and the credit appraisal process. An econometric methodology using the ANOVA model was used to assess the data. The results of empirical analysis indicate a positive relationship between microfinance and poverty alleviation in the period under study. Awareness levels of the population on the micro finance product were extremely high. However, a lack of an integrated credit appraisal system and competition among vendors to attract customers has provided an enabling environment for possible misuse of the product. Access to low cost funding and high interest rates has made the product very attractive even for the more established financial institutions, though the objective of using the product to alleviate poverty has got blurred. The results are similar to what was found in Bangladesh, where it was found that microfinance not only contributes to alleviating poverty, but also contributes to overall human development in the country. However, the results are contrary to what was observed in Indonesia, where it was found that the impact of micro finance on various household outcomes is generally insignificant.Item Ex-Dividend Day Stock Price Behaviour - Evidence from Colombo Stock Exchange(Faculty of Graduate Studies, University of Kelaniya, 2015) Karunaratne, P.; Peter, S.Efficient market is one in which prices fully reflect available information. Implication of an efficient market is that no excess returns can be made since current prices already reflect all available information. Recent research supports the hypothesis that CSE is not a semi-strong market and as a result there is a possibility for investors to make abnormal gains. The objectives of this paper was to identify ex-dividend price behaviour of stocks at the CSE and to identify suitable trading strategies around ex-dividend day to exploit this anomaly. A sample of 85 listed companies‘ with 470 ex-dividend events were selected covering the period January 2003 to December 2012. Relative Liquidity Ratio (RLR) was used to divide the sample into two groups to control for liquidity. Initially the stock price behaviour on exdividend day was examined using Raw Price Ratio (RPR), Raw Price Drop Ratio (RPDR) and Market Adjusted Price Drop Ratio (MAPDR). Thereafter, the event study methodology was used to examine the abnormal returns and abnormal volumes on and around ex-dividend day using the market model, mean adjusted returns model and market adjusted returns model. The findings from RPR, RPDR and MAPDR implied that the stock prices drop by less than dividend on the ex-dividend day. The results from the event study implied significant positive abnormal returns and volumes on and around ex-dividend day. This finding is consistent with the short term trading hypothesis, but could not be explained by the taxation hypothesis. Further, the results indicated that for the liquid stocks there are significant negative abnormal returns on cum-dividend day followed by significant positive abnormal returns on exdividend day. For the least liquid stocks there are significant positive abnormal returns on exdividend day followed by significant negative abnormal returns on the following day. These results also confirm that the CSE is not information efficient and investors have the opportunity to make unusual gains by trading around ex-dividend day.Item Board Independence and Corporate Performance(Faculty of Graduate Studies, University of Kelaniya, 2015) Peter, S.The large number of dramatic corporate collapses around the world over the last decade, focused attention on the importance of corporate governance to the long term success of a firm. The separation of ownership from management raises a key issue of how to effectively monitor managers to ensure that they act in the best interest of the shareholders and other stakeholders as well. The role of independent directors in improving the effectiveness of control has been the subject of debate in academic literature, especially in the context of a culture of poor corporate governance. The study explores this issue, paying particular attention on the relationship between corporate board independence and firms‘ financial performance in Sri Lanka. Using data obtained from Colombo Stock Exchange for the period 2004 through 2009, a sample consisting of fifty non-financial firms were used to assess board independence and their possible effects on firm performance. Data was gathered through published reports and a primary survey. Independence of the board was deconstructed to board composition as measured by proportion of independent directors and proportion of non-executive directors, and board leadership structure as measured by CEO non duality. The firm performance was measured using both financial and market performance indicators. After controlling for industry, firm size and changes in leadership structure, the results indicate support for stewardship perspective, with no convincing evidence to indicate that inclusion of independent directors is associated with improved financial performance. The weak governance structure which could be exemplified by ownership entrenchment, cross sitting of board members and lack of cumulative voting may explain the lack of evidence found. However, the results indicate that inclusion of independent directors is valued by investors and reflected in enhanced firm value.