Junior Research Symposia
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Item The Effect of Capital Structure on Profitability in Sri Lankan Listed Companies(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Madhubhashani, M.A.C.D.; Jayamaha, A.The capital structure decision is essential for any business organization. To understand how companies finance their operations, it is necessary to examine the determinants of their financing or capital structure decisions. All decision relevant to the capital structure is crucial for every company. The decision is very impotent due to impact of this decision has power to achieve competitive advantage as well as the prove survival of the company (Shubita & Alsawalhah, 2012). Capital structure decision is the vital one since the profitability of an enterprise is directly affected by such decision. The successful selection and use of capital is one of the key elements of the firms’ financial strategy (Velnampy & Niresh, 2012). This paper seeks to investigate the relationship between capital structure and profitability of listed companies on the Colombo Stock Exchange (CSE) during a five-year period. In order to meet the objectives of the study, data will collect from secondary data from financial statements of the selected companies and descriptive analysis, correlation and regression analysis is used as the methodology in this paper. Variables used for the analysis include profitability and leverage, equity ratios. Profitability measured by Return on Assets (ROA). The overall result of the study suggests short term debt and debt to equity in Sri Lankan context to be negatively related to profitability of the company. As well as long term debt to total assets and sales growth of the firm positively influenced to the profitability of the company.Item Impact of Liquidity on Profitability: With Special Reference to Listed Manufacturing Companies in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Hirantha, P.A.N.; Rajapakse, R.M.D.A.P.The ultimate goal of the companies is to enhance the wealth of the shareholders. For that purpose, the liquidity and profitability plays the vital and crucial role. That brings the problem that provided the basis for his research “how liquidity effects on profitability of listed manufacturing companies in Sri Lanka?” Especially the liquidity and its management affects to a great extent to the growth and profitability of a firm. The liquidity management becomes most important one as the inadequate liquidity may injurious to the smooth operations of the firm as well as the excess liquidity can be disturbed to achieve the greater profits. In this way, the present study is aimed to investigate the relationship between liquidity and profitability. The analysis is based on quarterly data of 20 manufacturing companies listed in the Colombo Stock Exchange over a period of past six years from 2010 to 2015. Return on equity and Return on assets were used as the dependent variables while Quick ratio, Current ratio and Liquid ratio were used as independent variable. Correlation and regression analysis as well as the descriptive statistics were applied in the analysis and findings suggest that there is a significant relationship exists between liquidity and profitability listed manufacturing companies in Sri Lanka. According to this study there has an influence in liquidity on the profitability of manufacturing companies.Item Value Investment Strategy vs. Growth Investment Strategy: Evidence from Colombo Stock Exchange(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Buddhika, H.J.R.Comparing the performance of value and growth companies has been tested regularly in most developed markets. However, importance given to this phenomenon in emerging countries, especially in Sri Lanka, is very low. This study examines about the Value and Growth companies of the Colombo Stock Exchange (CSE) since 2000 to 2014. The variables considered for evaluation are P/E ratio, P/BV ratio and Dividend Yield on monthly basis. This research has used only secondary data for the purpose of analysis and data extracted from annual reports of Colombo Stock Exchange (CSE), and the annual reports of selected quoted public companies. To avoid the thing-trading problem, the sample was selected based on number of trading days during the year. Then used a bench mark rate for all three ratios and selected value and growth companies. Companies which provide contradicted results within three ratios were excluded and remaining companies were considered for the analysis.Item Short-Term Interest Rates and Expected Stock Returns: Evidence from Sri Lanka(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Subasinghe, S.A.D.P.S.The relationship of Sri Lankan short term interest rate and expected stock return was different from and foreign market. The theories and prior foreign studies results were negative relationship among the variables. This study examines the relationship between short term interest rates, as measured by Treasury bill yields of 91 days, 182 days and 364 days Treasury bill rates and stock returns in Sri Lanka. Regression analysis is employed to analyze the short term interest rate and stock return for the period of 2005 to 2015. It is employed on monthly, quarterly and annual time horizon. Stock returns based on All Share Price Index (ASPI) and S&P SL 20 index are used in the study and Treasury bill yields of 91 days, 182 days and 364 days are considered as the short term interest rates in this study. Furthermore analyze the periodically to identify the effect of after end the war in to the Sri Lankan economy in relating to the current research. The result of current research shows that negative relationship between interest rate and stock return in Sri Lanka. Furthermore, the Treasury bill rates effect on Stock return, becomes lager and more significant with longer maturity Treasury bill yield. Treasury bill yields explain up to 13%, 17%, and 13% in monthly, quarterly and annual returns respectively. Further it reveals that the explanatory power increases with the longer time horizon.Item The Impact of Leverage on Real Earnings Management: Evidence from Listed Manufacturing Companies in Colombo Stock Exchange(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Kavinda, D.D.C.The amount of money that company has earned during a given period, usually a quarter or year, as reported based on appropriate accounting standards. Accounting earnings help to quantity the company's profitability, but investors should consider not just earnings quantity, but also earnings quality, in evaluating a company's accounting earnings. For recent years studies were done with regard to the accruals earnings management. Due to the high scrutiny of the lenders and the tendency to detect by the auditors, concepts have been changed to make economic sacrifices rather than manipulating accounting figures, by managing earnings through real activities such as practices that are less likely to draw auditor or regulatory scrutiny. The primary aim of this study is to examine the impact of Leverage on Real Earnings Management activities. The study was conducted using the sample of twenty five manufacturing companies’ listed in Colombo Stock Exchange with a firm-quarter observations for the period of 2009/2010 to 2014/2015 using a panel data analysis. The analysis is done based on the model developed by Roy Chowdhury in 2006.The results indicated that manufacturing companies are having abnormal cash flows and production cost in their operations and there is a significant positive association between the leverage and the real earnings management in the manufacturing companies listed in Colombo Stock Exchange, Which in turn could effects the earnings quality of the companies.Item A Study on Mandatory Offer Announcements and its Impact on Stock Return in Colombo Stock Exchange(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Ekanayaka, E.M.R.K.This study attempts to examine the impact of mandatory offer announcements on stock return on the Colombo Stock Exchange and highlights the mandatory offers and its grounds in the legal system in Sri Lanka. Although there are number of studies done on mandatory offers, it is hard to find the studies on impact of mandatory offers on stock return in Sri Lankan context. The primary aim of this study is to study the impact of mandatory offers on stock return in Colombo Stock Exchange using the sample from year 2010 to 2014. The study used secondary data for the purpose of analysis employing the event study methodology. More specifically, it employs the market model in generating abnormal returns surrounding mandatory offer announcement. The findings of this study demonstrated that on average market reacts positively to mandatory offer announcements. The market takes considerable time to fully incorporate information contained in mandatory offer announcements by the bidder firms and considerable anticipatory effect reflect the target firms. This research will be important to all those take interest in the share market. Especially it is more important to the investors, managers of the companies’ stock exchange regulatory agencies in their decision making.Item Integration of Colombo Stock Exchange and Global Stock Markets(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Silva, A.H.S.The examined the Integration of Colombo Stock exchange and global stock markets with the objective of identify the Influence on S&P SL20 by the SENSEX, S&P500, Nikkei225, SSE Composite index and to identify most influenced stock market indices among selected indices to S&P SL20. The most researchers study only the global and south Asian countries and research on the topic in Sri Lankan context is lacking. In this study, month-wise average prices of major stock market indices like SENSEX, S&P500, Nikkei225, SSE Composite index and SNP SL20 have been selected. These indices choose because they are the major stock market indices. This research has used only secondary data for the purpose of analysis and the sources of data include the Colombo Stock Exchange web site (CSE) and yahoo finance website. Secondary data collected for 60 months from 2009 to 2014. Multiple regressions have been tested for the select stock market indices. The results of this study shows that the overall model is not significant and that support the view that there is no any integration between domestic and international financial markets.Item Relationship between Ownership Concentration and Company Performances: Empirical Evidence from Colombo Stock Exchange(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Perera, N.P.D.H.S.The objectives of this research are to find out degree of Ownership concentration and to identify the relationship between Ownership Concentration and company performance using data of 62 listed companies in Colombo stock exchange (CSE) over the period of 2013 – 2014. This research has used only secondary data and main source of data include the annual report of the selected companies. Empirical research was conducted based on the 130 observations and findings base on the. Data are analyzed by using ordinary least square (OLS) regression as pooled data analysis with year dummy variable. Herfindal index (HHI) variable, percentage shares held by the largest shareholder (SH 1) variable and percentage shares held by top 10 largest shareholders (SH 10) variable to measure the Ownership concentration are the independent variable. Return on assets (ROA) use as a dependent variable to the model and other than to the Concentration variables, Liquidity, Leverage, and Age of the company, Total assets and Total sales use as a control variable to the model. Based on the Ownership concentration variables – HHI, SH(1) and SH(10) identified that Sri Lankan companies are having a high degree of ownership concentration and this high degree of ownership concentration does not have statistically significant relationship with company performances i.e. listed firms which having high degree of ownership concentration does not have any relationship with achieving company performance. However the explanatory power of the overall model (R2 value) is below the average and further research are necessary to increase the explanatory power of the overall model.Item Corporate Social Responsibility Practices Evidence from Selected Companies in Colombo Stock Exchange(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Gallage, G.I.D.This study investigates about the corporate social responsibility practices based on selected companies in Colombo Stock Exchange (CSE). The study also looks into the actual contribution of CSR activities conducted by companies of CSE. The study documents the best corporate social responsibility reporting sector of Colombo stock exchange. Study also identifies how Sri Lankan companies perceive Corporate Social Responsibility. This research has used secondary data for the purpose of analysis and the sources of data include the annual reports of selected companies. This study has selected ten sectors and from each those ten sectors six companies have been selected. These ten sectors include Bank and Financial, Hotels and Travels, Beverage, Diversified holdings, Manufacturing, Trading, Plantation, Construction, Health care and services. Study results suggested that banking sector is the best for practicing corporate social responsibility. Companies have different reasons for issuing CSR reports. Information on CSR activities is measured valuable by both academic researchers and business managers as it provides a working framework on which future studies can be based. In addition, it improves understanding of the social obligations, which corporate entities are obliged to their stakeholders and society in general.Item Determinants of Initial Public Offering Pricing in Colombo Stock Exchange: Study of Under-Pricing(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Perera, M.H.N.Initial Public Offering (IPO) underpricing is the most crucial area which embedded with IPO pricing. IPO underpricing can define as increase the first day closing price of IPO share at market than its offer price. Merely IPO underpricing is one of the favorable occurrences to the company as well as to the investors who have invested on those shares. Therefore, this study is to analyze whether there is an IPO underpricing exist in Colombo Stock Exchange and identify the determinants of IPO underpricing. Other than that this research paper addresses the impact of civil war towards the IPO underpricing. In specific, the study addresses the relationship between the IPO underpricing and supposed determinants throughout a regression analysis. By accepting the alternative hypothesis researcher posit that offer price and issue size has negative significant influence on IPO underpricing. And debt to equity (D/E) ratio, Sector P/E ratio, and cumulative average return of ASPI has significant positive relationship with IPO underpricing. The variables, Market capitalization, Earnings per share (EPS) ,Net profit ratio, Oversubscription rate are recognize as insignificant determinants in analyzing IPO underpricing in Colombo Stock Exchange since some absence of ordinary least square (OLS) assumptions and contrary to the expectations of literature reviews in this area. Moreover this study observes that average IPO underpricing is increase in post war period than the prior to war period due to the economic and political stability after the war ends.