Browsing by Author "Karunarathna, W.V.A.D."

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Effect of Accounting Information System Quality on Financial Performance of Small and Medium Enterprises: With Special Reference to Western Province in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Wijerathne, E.W.G.G.H.C.; Karunarathna, W.V.A.D.
Information technology is crucial for every organization in the current competitive business world and Accounting Information Systems (AIS) play a major part in that information advancements. SMEs play a crucial role in all economies, irrespective of their development status. The objective of this study is to identify the Effect of Accounting Information System Quality on the Financial Performance of Small and Medium Enterprises in Sri Lanka. The quality of AIS is measured through the independent variables of System Flexibility, System Sophistication, Effectiveness of the System, and System Control. The Dependent variable of financial performance is measured through the Return of Assets of the selected SMEs. This study employed a convenience sampling technique to efficiently attain the desired sample size in a cost-effective and timely manner. The analysis was conducted by using the SPSS software and descriptive statistical measures, correlation analysis, and Linear regression analysis. According to the results of correlation analysis, there is a significant positive relationship between dependent and independent variables. The quality of AIS has a significant relationship with the financial performance of SMEs. Further results found that there is a significant effect of accounting information system quality on the financial performance of small and medium enterprises. That means quality AIS enhances financial performance. The Findings of the study revealed that system effectiveness and system control have a significant impact on financial performance as per the multiple regression analysis. Improving the financial performance of SMEs in Sri Lanka is facilitated by ensuring the excellence of AIS. SME management should additionally focus on improving the quality of their AIS to facilitate comparisons with similar businesses in the sector as well as in the past. This improvement is vital for benchmarking and making well-informed decisions.
The Effect of Sustainability Reporting Disclosures on Firms’ Performance: A Comparison between Finance Companies & Non-Finance Listed Companies in the Colombo Stock Exchange
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Perera, K.A.D.S.D.; Karunarathna, W.V.A.D.
This study investigates the impact of Sustainability Reporting Disclosure on Firm Financial Performance, specifically comparing finance companies and Non-Finance Companies in Sri Lanka, focusing on Listed Companies on the Colombo Stock Exchange. The study assesses economic, environmental, and social disclosures within sustainability reporting and their influence on financial performance. Despite a global trend in increased investor interest in non-financial performance, the research identifies a lower-than-expected level of sustainability disclosure among the selected companies. Using secondary data from annual reports, including financial and non-financial information, the study employs descriptive analysis, correlation tests, and regression analysis. Results reveal a moderately positive relationship between sustainability reporting and Return on Assets (ROA), indicating that companies can achieve positive outcomes by prioritizing either sustainability or financial performance. The research questions are What is the impact of Sustainability Reporting Disclosure on Firm Financial Performance and Does the impact of Sustainability Reporting Disclosure on firm performance differ between Finance companies and non-finance companies? Findings suggest a positive relationship between sustainability reporting disclosure and Return On assets (ROA), with differences in the effects of economic, environmental, and social disclosures on the finance sector and non-finance sector. Recommendations include enhancing the quality of disclosure in Sri Lanka, given the absence of specific standards and potential challenges for stakeholders in comparing reports. The study's contributions extend to providing insights into the motivations for social transparency and potential sector-specific financial indicators. Future research may delve deeper into the dynamics of sustainability reporting in various industries. Overall, the study underscores the critical relationship between sustainability reporting disclosure and the success of both finance companies and non-finance companies in Sri Lanka, signaling a growing industry shift toward sustainability practices.
Factors Affecting Auditor’s Ability in Detecting Frauds: With Special Reference to Big Four Audit Firms in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) De Costa, W.A.H.M.; Karunarathna, W.V.A.D.
The surge in fraud incidents globally has triggered substantial financial losses for organizations, accounting for a yearly depletion of 5% in their revenue. Auditors bear the crucial responsibility of detecting and mitigating fraudulent activities during audits. In Sri Lanka, fluctuations in fraud occurrences persist annually, prompting a focused investigation into the factors influencing auditors' efficacy in fraud detection. This study aims to scrutinize the impact of key elements—namely, auditor independence, competence, professional skepticism, experience, and industry expertise—on auditors' ability to uncover fraud, specifically targeting auditors within the prominent Big Four audit firms, an aspect overlooked in prior research. The methodology encompassed a four-step process, involving the selection of a stratified sample comprising senior audit staff from the Big Four audit companies in Sri Lanka. Employing a deductive approach, primary data were collected through structured questionnaires, with 60 respondents participating in the survey. The conceptual framework identified the aforementioned independent variables, evaluated using a Likert scale ranging from 1 to 5 to measure their impact. Data analysis was conducted using a regression model in the SPSS package. The results derived from this analysis indicated that among the five identified independent variables, three demonstrated a positive correlation with the dependent variable—auditor's fraud detection ability. Notably, auditor independence, competence, professional skepticism, and experience exhibited a favorable influence on the auditors' capability to detect fraud. However, industry expertise emerged with a contrary outcome, revealing a negative impact on auditors' fraud detection abilities. Conclusively, this study affirms that auditor independence, professional skepticism, competence, and experience positively contribute to auditors' aptitude in detecting fraudulent activities. In contrast, the possession of industry expertise appeared to impede the auditors' efficacy in identifying fraud. These findings shed light on critical factors influencing auditors' performance in uncovering fraud and highlight the nuanced interplay between various competencies and their impact on fraud detection within the auditing domain.
Factors Affecting Individual Investment Decisions Making; Evidence from the Colombo Stock Exchange
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Rajapaksha, R.G.M.M.; Karunarathna, W.V.A.D.
This study examines the factors that affect the stock market investment decisions made by individuals. The impact of the four independent factors, herding, overconfidence, accounting information, and firm image on the dependent variable which is investment decision making is investigated in this study. The prospect theory and heuristic theory are used as the theoretical framework to assist in better understanding how herding, overconfidence, accounting information, and the image of the company affect stock investment decisions among individual investors. The study employs a mixed-method approach, utilizing both questionnaires and interviews to gather data from a sample of 384 individual investors in the CSE. The population encompasses a diverse group of investors, considering factors such as age and education levels. The study's quantitative descriptive methodology focuses on investors who have made investments in the Colombo Stock Exchange (CSE). The 372 valid responses gathered from the survey questionnaire and interviews underwent statistical analysis. Descriptive statistics, Spearman’s rank correlation, and the ordinal logistic regression analysis were used to analyze data. Herding, accounting information, and overconfidence have significant impacts on individual investment decision making while the firm image has no significant impact on individual investment decision-making. The results of Spearman’s rank correlation indicate herding has a positive relationship with individual investment decision-making while overconfidence, accounting information, and firm image have a negative relationship with individual investment decisions. The findings support the hypotheses about accounting information, and herding effect, but reject the hypothesis regarding overconfidence and firm image according to the ordinal logistic regression analysis. According to the study's findings, investors need to understand how the herding effect, accounting information, and overconfidence affect their ability to make sound decisions in the stock market. Investors try to avoid losses and consider the returns of the company when making investment decisions as per the study. Investors believe that their decisions about various aspects of stock investing are influenced by the opinions of other investors. Investors show confidence in the value of the stocks in their portfolio and, most of the time, are willing to consider other investors’ opinions when deciding which stocks to buy and sell. Dividends are crucial in stock investment decisions, with investors prioritizing a firm's reputation and community involvement. Ethics and political affiliations have less impact. The study's conclusion discusses theoretical and practical implications, and recommends further research.
Factors Affecting to Formal Accounting System in SME’s 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) Bandara, R.M.S.S.S.; Karunarathna, W.V.A.D.
Small and Medium enterprise can’t be ignored throughout the economic and social world because of the Small and Medium (SME) sector provides more contribution to Gross Domestic Product (GDP) and significant percentage has taken by SME sector in the Sri Lankan economy and also it is very much important for solving unemployment problem of the country. It is important to study how affect formal Accounting systems effect on the survival and growth of SMEs. Therefore, this study aims to identify what are the factors affect to the formal Accounting System in SME’s in Sri Lanka. So, Financial Accounting Practices, Skills of Financial Accountant, Business Life Cycle, External Pressure and Capacity Argument are considered by the study as independent variables of the study that affect to the adoption formal accounting system for the SME’s. The study used Primary data of 60 Small and Medium Enterprises located in Kurunegala District. A well-structured questionnaire was used to collect data from the respondents of the study. Descriptive statistics and Correlation analysis were applied using SPSS software. The Results of the study revealed that there is a positive relationship between formal Accounting System and SME’s Financial Accounting Practices, Skills of Financial Accountants and External Pressure
The Impact of Corporate Characteristics on Sustainability Reporting Listed in the Colombo Stock Exchange
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Madushan, M.M.V.; Karunarathna, W.V.A.D.
The term “corporate sustainability” describes a new corporate management model. These include the linkages between environmental, social, and economic issues as well as long-term perspectives. The goal is to provide long-term value for stakeholders without compromising people, the planet, or the economy. This study investigates the impact of determinants on corporate sustainability reporting (CSR) disclosure. While many studies have investigated sustainability reporting in developed countries, there is a dearth of research in the context of developing countries. As a developing country in the Sri Lankan context, it was confirmed that a few times the researchers gave comparatively less attention to investigating the impact of firms’ specific determinants on sustainability reporting disclosures. Thus, the study aimed to investigate the impact of firm characteristics on corporate sustainability reporting in Sri Lanka related to listed companies. In the study, the firm’s age, firm size, Leverage, and Firm profitability, are considered independent variables. Those variables are measured by using the total asset, the number of listed years, Total debt to total asset ratio, and Return on equity. The dependent variable of CSR was measured by using the Global Reporting Initiatives (GRI) index. Consequently, these quantitative data were employed in the panel data regression model using E- Views software to scientifically analyze the data to identify the significant relationship between these two variables. This study documents that firm size and leverage are positively associated with sustainability reporting and firm age, negatively associated with CSR, and profitability is not significantly associated with SR in the Finance sector. Leverage, firm age, and firm size are positively associated with SR while profitability is negatively associated with SR. This study helps the shareholders vi and investment community evaluate the firm and make the optimum decisions. Furthermore, the management can also get knowledge for making decisions and making differences by getting efficient outcomes from that.
The Impact of Corporate Governance on Financial Fraud Evidence Listed Companies in Colombo Stock Exchange
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Ariyarathna, D.K.B.W.S.I.; Karunarathna, W.V.A.D.
This research focuses on the impact of corporate governance on financial fraud in the context of listed companies on the Colombo Stock Exchange. Financial Fraud (FF) is the dependent variable in this study. the number of board independent directors (NBI), the number of board financial experts (NBFE), the Number of Board Meetings (NBM), the Number of Audit Committee independent (NACI), the Number of Audit Committee Financial Experts (NACFE), and Number of Audit Committee (NACM), and Role Duality (RD) are independent variables. Firm Age is regarded as the control variable. Finding the impact of corporate governance on financial fraud is the goal of the grant. The Beneish model is used to measure financial fraud. The population is the listed companies of Sri Lanka. There are 290 listed companies and 20 industries on the Colombo Stock Exchange. The sample is 129 companies that were taken as a sample for this study. It was selected based on the number of companies in an industry. That is, only industries with more than 20 Companies were selected as the industry sample. Food, Beverage and Tobacco, Consumer Services Capital Goods, and Materials 4 industries were selected. The analysis was done through the EViews software which was used for panel analysis. The Number of independent board Director (NBI), the number of board financial experts (NBFE), the number of board meetings (NBM), the number of independent audit committees (NACI), the number of audit committee financial experts (NACFE), the number of audit committee meetings (NACM), and role duality (RD) are all significant. All the other independent variables except role duality have a negative impact on financial fraud and Role duality has a positive impact and the control variable, firm age is not significant. Important information on "The Impact of Corporate Governance on Financial Fraud" is provided by this study to scholars, investors, regulators, and policymakers. It is suggested that the incorporation of assurance services improves corporate governance's capacity to identify and mitigate fraud. We seek to explain how it relates to the detection and mitigation of financial fraud and to advance understanding of effective control structures in corporate environments.
Impact of Institutional Ownership and the Value Relevance of Accounting Information of Non-Financial Companies Listed In CSE
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Jayani, G.V.; Karunarathna, W.V.A.D.
The relationship between accounting information and institutional ownership for non-financial companies listed on the Colombo Stock Exchange (CSE) is investigated in this study. The impetus for this study stems from the growing role of institutional investors in the financial system and the importance of accounting data in the decision-making process regarding investments. Through a thorough empirical analysis, the main objectives are to address the following: Analyze how institutional ownership affects non-financial companies listed on the Colombo Stock Exchange's value relevance of accounting data. Analyze the impact of institutional ownership on market efficiency, focusing on the way that accounting information is accounted for in stock prices. Analyze the relationship between institutional ownership and corporate governance practices, especially as it relates to financial reporting and disclosure. Examine potential impacts on investor relations and financial reporting regulations at the Colombo Stock Exchange. This study uses a large sample of nonfinancial companies and applies state-of-the-art econometric techniques to analyze financial data and ownership structures. The aim of the empirical findings is to provide investors, regulators, corporate decision-makers, and accounting and finance specialists with important new insights. The study is significant because it may help us better understand the intricate connections between institutional ownership and the value-relatedness of accounting data in the specific context of the Colombo Stock Exchange. By clarifying these correlations, the study contributes to a broader scholarly discourse and offers practical guidance to interested parties navigating the dynamic financial market landscape of Sri Lanka.
Impact of Institutional Ownership and the Value Relevance of Accounting Information of Non-financial Companies Listed in CSE
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Jayani, G.V.; Karunarathna, W.V.A.D.
This study looks at the impact of accounting information on the stock prices of listed travel and hotel companies in Sri Lanka during Eleven years, from 2013 to 2023, and its value significance. This analysis attempts to fill the knowledge gap by examining the relationship between financial performance indicators specifically, book value per share (BVPS), earnings per share (EPS), and dividends per share (DPS) and market valuation in the context of the scarcity of empirical research in this economically significant sector. This long-term study uses multiple regression analysis on a sample of twenty companies to determine the predictive potential of various financial parameters on stock prices. The results show that DPS and BVPS have a substantial impact on stock prices, which is consistent with their significance in financial reporting and investor decision-making. On the other hand, EPS only marginally indicated relevance, indicating a more intricate relationship with sector stock prices. The research also finds that the residuals of the regression model have positive autocorrelation, which suggests that the model may have missed certain sector-specific or time-series properties. This emphasizes how future models must take into account more variables to increase the reliability of prediction assessments for investment strategies. This study is significant because it adds to the limited research on the capital market behavior of Sri Lanka's hotel and tourist sectors. It highlights the crucial role that clear and understandable financial disclosures play in the capital markets and offers insights for investors, corporate management, and policymakers. According to the findings, stronger financial ratios and higher-quality accounting data may have a big impact on how much a company is valued in the market in emerging nations like Sri Lanka.
The Impact of Integrated Reporting on Firm Value and Performance: With Special Reference to the Selected Listed Companies in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, 2020) Nilmani, P.G.Y.; Karunarathna, W.V.A.D.
The changing economic and business environment have emphasized the weaknesses of business reporting historical information and financial information. Most of the investors are currently interested in both financial and non-financial information. As a result, a new business reporting framework called the Integrated Reporting Framework was introduced by the International Integrated Reporting Council (IIRC). This study primarily investigates the impact of integrated reporting (IR) on firm value and performance of the listed companies in Sri Lanka. Even though adopting integrated reporting is not a mandatory requirement in Sri Lanka, most companies voluntarily adopt an integrated reporting framework to present and disclose their financial and nonfinancial information in one report. Numerous studies have been done to find the impact of IR on firm value and performance worldwide. Nevertheless, there is a research gap based on this in the Sri Lankan context. Hence the purpose of this study is to investigate the impact of IR on firm value and performance for the listed companies in Sri Lanka. This study mainly will test the relationship between the level of compliance to IR and its influence on the firm value and performance of the organizations in order to achieve this purpose. This research will use the return on equity (ROE) and Debt Ratio (DR) to measure the performance of the organization and market price per share to measure the firm value. This study will construct the IR index to measure the level of compliance with IR. This research has used all the listed companies as the population, and 35 companies were selected as the sample out of them for the study. Data will be collected from annual reports for the period from 2015 to 2019. In this study, descriptive analysis, Pearson correlation analysis, and regression analysis are used to analyze the data. Accordingly, the findings of this will offer a better understanding of the influence of integrated reporting has on firm value and performance. Further. The findings of this study will be useful for regulatory bodies to understand the existing level of integrated reporting in Sri Lankan listed companies in the Colombo Stock Exchange, and it will be helpful for developing a new reporting framework. In addition to that, the different other stakeholders, such as present and potential investors, also can use these findings to get an understanding of the impact of integrated reports on the performance and the value of firms.
The Impact of Intellectual Capital on Firm’s Market Value and Financial Performance
(4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Ganegoda, G.P.S.K.; Karunarathna, W.V.A.D.
Intellectual capital has a huge impact on the firms’ value creation process and it will also generate competitive advantage to the organization with the development of knowledge based economy. The study aims to identify the impact of intellectual capital on firm’s market value and financial performance of the bank, finance and insurance sector and manufacturing sector in Sri Lanka. Return on asset and market to book value are separately used as dependent variables. The Value Added Intellectual Coefficient (VAIC) method introduced by Pulic (2000) is used to measure the intellectual capital of the firm. The study used secondary data of 15 bank, finance and insurance sector companies and 15 manufacturing sector companies covering the period of 2012 to 2017. Data were analyzed using linear regression model and used E-Views software to perform statistical tests. The results revealed that intellectual capital significantly impact to the firm’s financial performance in bank, finance and insurance sector. However, according to the results there was no significant impact of intellectual capital on firm’s financial performance in manufacturing sector. Furthermore, intellectual capital has no significant impact on firm’s market value in both sectors
The Impact of Internal Control Systems on Profitability: A Study Based on Employees’ Perception of Licensed Commercial Banks 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) Jayaweera, W.T.N.; Karunarathna, W.V.A.D.
Internal control system plays an important role in preventing and detecting fraud and also protecting the tangible and intangible assets of an organization. Therefore, it is important to study how the internal control system of an organization affects the organization’s performance. Indeed, it is critical for banks and financial institutions to recognize the risk they encountered. So the purpose of this study is to investigate the impact of internal control system on profitability of an organization and it is mainly based on employees’ perception on internal control system of Licensed Commercial Banks in Sri Lanka. Internal control system consists of control environment, risk assessment, control activities, communication and monitoring. The study selected a sample of permanent employees of 25 licensed commercial banks in Sri Lanka. The study used on primary data and it was collected using semi-structured questionnaires with open- ended and close-ended questions. Data was analyzed by using Statistical Packages for Social Science (SPSS). Descriptive statistical measures and the regression analysis were applied to analyze the data of the study. The results of the study showed that the internal controls have statistically significant impact on profitability. Furthermore, findings of the study revealed that the elements of internal control systems comprising control environment, control activities and monitoring have significant and positive impact on profitability in licensed commercial banks in Sri Lanka
The Impact of International Financial Reporting Standards Adoption on the Value Relevance of Accounting Information: Evidence from the Public Listed Manufacturing Companies in the Colombo Stock Exchange 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) Athukorala, A.S.P.; Karunarathna, W.V.A.D.
The purpose of this study is to investigate the impact of International Financial Reporting Standard (IFRS) adoption on the value relevance of accounting information in Sri Lanka and also the study has made a comparison between the value relevance of accounting information in pre- and post- adoption periods of IFRS. Sri Lanka has adopted Sri Lanka Financial Reporting Standards (SLFRS) which is almost aligned with the IFRS with effect from 1st January 2012 onwards. This study employs Ohlson (1995) price regression model to explain value relevance of accounting information. It explains market value per share (MPS) using earning per share (EPS) and book value of equity per share (BVEPS). The pre-IFRS period consist of 5 years from 2007 to 2011, and the post-IFRS period is 5years from 2012 to 2016. The sample comprises 28 firms and 280 firm-year observations. There are many studies available on IFRS adoption internationally. However, there is no clear evidence that IFRS adoption enhances the quality of accounting information pertaining to Sri Lankan context. Mainly the data were analyzed by using multiple regression model and correlation analysis. Results of the study showed that value relevance of accounting information has not significantly improved in the post- IFRS period than the pre-IFRS period. Further studies are encouraged to conduct by expanding the sample size and incorporating more accounting quality measurement indicators.
The Impact of Working Capital Management on the Financial Performance of Listed Companies in Sri Lanka: A Comparison between Pre and Post Covid-19 Pandemic
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Senawirathna, W.M.T.W.; Karunarathna, W.V.A.D.
The management of working capital, which ensures the survival of a business enterprise, is one of the most important and challenging aspects of overall financial management. Due to this significance, working capital management has been the subject of many studies around the world that reveal inconclusive results. Yet, in the Sri Lankan context, very little research has been carried out in this regard. Hence, this research focused on working capital management and the firm’s financial performance in Sri Lanka. The study aimed to identify; the impact of working capital management on financial performance. The Covid-19 epidemic affects mostly to the listed companies in addition to the former. Listed companies might continue to operate in one way by strengthening their financial plans. This study also attempts to determine how selected listed companies’ actors perceive the pandemic's existence in Sri Lanka and what commercial and financial tactics are being used to weather the current pandemic crisis. To comprehend the perspective or point of view of looking at the financial tactics used by companies during the COVID-19 pandemic so that enterprises might continue to this day. Therefore, this study was carried out to investigate and seek the impact of working capital management on the financial performance of listed manufacturing firms in Sri Lanka in the financial years 2017 and 2022. Working capital management was measured by using Inventory turnover days, Average collection period, Average payable period, and financial performance was measured by using the ratios of ROA and the study considered the firm size as a control variable. The study was conducted using the quantitative approach. 40 listed companies were selected for the convenience of the study. This study used secondary data. Data were collected from the published annual reports in the Colombo stock exchange of selected listed companies in the financial year of 2017 and 2022. Data were analyzed by using the EViews software. Descriptive statistics, correlation analysis, and regression analysis were used to analyze the data. The study found that the covid 19 pandemic has significantly affected on firms’ financial performance. The study suggests that effective working capital management positively impacts financial performance, especially for listed companies in Sri Lanka. It suggests that improved inventory turnover, faster collections, and strategic payables can significantly improve financial performance. The findings encourage companies to refine financial planning and seek support to navigate economic challenges.
The Value Relevance of Accounting Information: A Comparison between Published Interim and Annual Financial Statements
(4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Weerasinghe, P.S.M.; Karunarathna, W.V.A.D.
Main objective of the accounting information is providing useful information to stakeholders of the entity. Current and prospective investors are the most important users of such information. Public Listed Companies in the stock market use financial statement as one of the main medium of communication with their stakeholders. Value relevance can be defined as the ability of information disclosed by financial statement to capture and summarize firm value. Investors predict future performance through existing accounting information. When the economy changes time to time investors need to be referred timely information for the investment decision making. If the investors depend on outdated information, investment decision will become inappropriate and ineffective. On the other hand, investors can obtain the short-term financial progress from the interim quarterly financial statements and also they can use audited annual financial reports after completing the accounting year. Therefore, the purpose of this study is to distinguish the value relevance between interim financial statements and the audited annual financial statements in Sri Lanka context. The study is based on 35 listed manufacturing companies in the Colombo Stock Exchange (CSE) for the period of 2012 to 2017. The relevant data were gathered from the published interim financial report, audited annual financial statement and publish research articles. Earnings per share, book value per share, dividend per share and return on equity are use as key independent variables. Data were analyzed using correlation and regression analysis through E-views software. The results show that the interim financial statement appear to have higher value relevance than annual financial statement and value relevance of accounting 4th International Conference for Accounting Researchers and Educators 61 information has the significant impact on share price and value relevance of accounting information is significantly correlated with the share price