Browsing by Author "Perera, K.H."

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Effect of Trade Receivables Management on The Profitability of Retailing Firms Listed in The Colombo Stock Exchange
(Faculty of Science, University of Kelaniya, Sri Lanka, 2020) Akmeemana, N.D.; Perera, K.H.
Trade receivables will lead to increased core revenue and operational profits. However, if trade debtors due is not collected within the agreed time period, it will lead to bad and overdue receivables, leading to a decrease in operational profits and ultimately total profit. Therefore, this study was conducted to explore the relationship between Trade Receivable Management (TRM) and profitability of retailing companies listed under the Colombo Stock Exchange for a period of nine years. There are thirteen companies listed under the retailing industry and the total population was selected for the study to ascertain a better and reliable conclusion. Profitability was measured using Return on Asset (ROA); and the Debtor Collection Period (DCP), bad debt to receivables ratio and accounts receivables turnover were used to measure the trade receivables management of companies. Secondary data was obtained from the published annual reports of the sample and analyzed using SPSS. Correlation and regression analysis was used to measure the results. Findings of this research will help the management in making decisions that will assist in the overall working capital management in formulating their strategies and when negotiating with clients, credit control managers in the organization, etc. Also this study will assist researchers to build into the existing body of knowledge to assist in additional researches.
Financial statement fraud detection with the new fraud diamond model; special reference to listed companies of material sector
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Jayasekara, K.P.A.; Perera, K.H.
Financial statement fraud scheme is the least common and most costly in comparison to asset misappropriation and corruption. Because in the form of material misstatements of financial statements are harmed the investors and creditors of the entity. The purpose of this study is to evaluate the effect of the new fraud diamond model in explaining financial statement frauds. This study considered the new fraud diamond model which is an evolution of the fraud diamond theory and fraud triangle analysis. The variables included motivation, opportunity, personal integrity and capability. To measure the dependent variable, financial statement fraud, the ‘Benish M-Score model’ was used. All 18 companies have taken as the sample and data was collected from annual reports published in the Colombo stock exchange for the period from 2017-2021. Data was analyzed using regression analysis, descriptive statistics and correlation analysis. Findings of the study will be useful for any entity in order to identify the factors that causing for the financial statement frauds and their significance to the fraudulent financial reporting and supports the new fraud diamond model in elaborating the financial statement fraud phenomenon. The new fraud diamond model theory is a new and under-developed theory. So, the author suggests further research to be carried out to strengthen the theory and ensure whether it can be used as a reference to find out the causes of financial statement fraud. In addition, the object used in this study is limited to material sector companies, so the author suggests that further research combine several types of companies.
The Impact of Assets Liability Management on the Financial Performance of the Licensed Commercial Banks in Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Madhushani, W.I.; Perera, K.H.
The Banking sector in Sri Lanka is one of the most dynamic and vibrant sectors of the economy. The commercial banks are influenced by various types of risks and discrepancies which directly impact to the short-term and long-term profitability and the sustainable capacity of earnings. If financial institutions have effective assets liability management process that will closely monitor and equalize both assets and liabilities and focus on the stability of adverse influences of both risks and discrepancies. The study was conducted to examine the impact of assets liability management on the financial performance of the licensed commercial banks in Sri Lanka. Capital adequacy ratio (CAR), Non-performing loan ratio (NPR), Income diversification ratio (IDR), Liquidity ratio (LR) and Operational efficiency ratio (OER) were used as assets liability indicators while return on assets (ROA) and return on equity (ROE) used as the financial performance indicators. This study uses secondary sources to collect data such as published annual report of licensed commercial banks and central bank web site from financial year 2011 to 2020. All 24 licensed commercial banks in Sri Lanka were used for the study. It was found that there is a significant impact from the operational efficiency, income diversification and liquidity ratios on the financial performances and also significant negative impact from the NPL ratio and CAR ratio on the financial performances of the licensed commercial banks in Sri Lanka. The findings will be useful for shareholders, creditors, depositors, managers and further investors to choose the best opportunity for their investment and regulators to make and govern the policy and regulations.
Impact of Audit Expectation Gap on the Investment Decision Making of Public Listed Companies in Manufacturing Sector
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, 2020) Maduwanthi, M.R.A.M.; Perera, K.H.
The audit plays a major role in today’s world. This has created a concern on the existence of the expectation gap between auditing profession and the general public. Sri Lanka as a developing country with a developing financial market in which foreign and local investors depend on audited financial reports for investment decisions. Audit exception gap creates a significant concern among the parties. Therefore, this study is conducted with the main objective to examine the impact of audit expectation gap on the investment decision making of public listed companies in manufacturing sector. Responsibility of auditor, reliability factor, nature and meaning of audit report messages and audit independence were used as the independent variables for the study and investment decision making as the dependent variable. 20 public listed companies in manufacturing sector was selected for the sample based on convenience sampling method. Questionnaires were distributed among the shareholders and auditors to collect data. This study will provide valuable insights to auditors, audit firms, in Sri Lanka whereas to the users of financial statements of all organizations in identifying the factors that would cause audit expectation gap and how these factors would help in making better investment decisions.
The impact of corporate income tax on investment decisions: evidence from food, beverage and tobacco sector in Sri Lanka.
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Sewwandi, M.S.; Perera, K.H.
The corporate income tax regime in Sri Lanka offers many forms of assets-based investment incentives. Do corporations' investment decisions take these variations into account, and if so, how much. The research work examines the impact of corporate income tax on investment decisions in Food, Beverage and Tobacco sector in Sri Lanka. The secondary data was obtained from firms’ annual reports, CSE website and stand-alone sustainability reports and analysed using E-Views. Effective tax rates are a useful tool for policymakers and company managers who need concise but detailed information on investment tax loads. The relationship between economic agents' investment decisions and corporate income (profit) taxation has been widely demonstrated in theoretical works to date. For investment decisions, the characters in the study employ the average tax rate and the effective tax rate. Our findings proved a negative relationship between corporate income tax and investment decisions. These findings will help decision-makers and other interested parties to develop the corporate tax policy in a way that does not discourage company investment in Sri Lanka.
The Impact of Covid - 19 Pandemic Situation on the Financial Performance of Banking & Finance Sector in CSE
(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Sandakumara, H.R.; Perera, K.H.
The Covid – 19 pandemic has negatively impacted to all most all the businesses’ financial performance, not only in Sri Lanka but also throughout the world. This research aims to identify the impact of the Covid – 19 pandemic on the financial performance of banking and finance sector companies listed in Colombo Stock Exchange. 62 companies in banking and finance sector were selected for the sample and data was collected using the published quarterly reports for the period from 2019 to 2021. Descriptive statistics and the sample t – test were used study to analyses the data collected from secondary sources. Liquidity ratio (LR), leverage ratio (LVR), short term activity ratio (STAR) and profitability ratio (PR) were used as the dependent variables while financial performance was used as the independent variable. The results suggested that, there is a significant impact from the Covid – 19 pandemic on the liquidity ratio, leverage ratio, short term activity ratio and profitability ratio.
Impact of digital economy on tax revenue of registered taxpayers in Sri Lanka: evidence from CSE registered companies
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Senarathna, W.M.I.A.; Perera, K.H.
Economic activities pattern is currently growing exponentially and very dynamic as a result of technology penetration into each activity line. Nowadays, business activity has become mobile and even intangible, where the physical form of a business entity is unnecessary and the business unit or each value chain of a corporate entity is becoming more integrated. Almost all countries need to change their tax policies in line with the new requirements of the digital economy. This study aims to find out whether tax revenue is affected by the digital economy in Sri Lanka and what kind of relationship between the digital economy and tax revenue. The research is quantitative in nature and will cover a time period ranging from 2014 to 2020 which sums up to seven years. Simple linear regression model is to be used to analyze the secondary data taken on the independent variable, computer literacy rate on the dependent variable, tax revenue. Tax revenue mainly covered the Value Added Tax (VAT) and Income Tax (IT) which are highly contributed to the total tax revenue in Sri Lanka. In the Sri Lankan context, this research can provide insights to what extent the digital economy affects the tax revenue in Sri Lanka.
The Impact of Dividend Policy on Firm Performance of Finance Companies in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, 2020) De silva, W.S.D.; Perera, K.H.
Dividend Policy is one of significant issues in corporate finance. The ultimate objective of an organization is to maximize the shareholders wealth. Shareholders wealth and Profitability of organization can maximize through maintaining proper dividend policy. Therefore this study was conducted to analyze relationship between dividend policy on Firm Performance of the Financing Companies, listed in the Colombo Stock Exchange, Sri Lanka. Related prior studies were limited to manufacturing sector, Hotel and Restaurant sector companies listed in Colombo Stock exchange. Therefore, this study was conducted on the finance sector companies listed in Colombo Stock Exchange as the finance sector plays an important role in economic growth by mobilising savings and allocating credit across in the economy. Data was collected for the period from 2011 to 2019 for twenty two (22) finance sector companies using random sampling technique and analyzed using Descriptive Statistics, regression and correlation analysis. Ordinary Leased Square method was used to estimate Regression equation. The findings of this study offers a better understanding on the finance sector companies listed in Colombo Stock Exchange. Further, this research will help policy makers, Decision makers and future researchers making decisions with related to the dividend policy and there by can decide the optimal dividend policy in order to maximize both performance of the company and the shareholder’s wealth. The study helps managers to make a benchmark to value where the firm can gain high profit by using dividend policy.
The Impact of Intellectual Capital and Financial Performance in Sri Lankan Banks
(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Sandaruwan, D.G.S.; Perera, K.H.
The main purpose of this paper is to examine the impact of Intellectual Capital (IC) on financial performance of Sri Lankan banks. The Value-Added Intellectual Capital coefficient (VAIC) approach developed by Pulic (2000) was used to determine the IC performance. Accordingly human capital, structural capital and capital employed efficiency were used as intellectual capital constituents of this research. Return on Equity (RoE) was used to measure the financial performance of selected banks. The data were obtained from the annual reports of 24 commercial banks listed in Colombo Stock Exchange (CSE) for the period from the year 2017 to 2021 to measure the impact of intellectual capital constituents on financial performance. Findings of this research indicated that Sri Lankan banks in general, have relatively lower human capital and structural capital efficiency compared to capital employed efficiency. Therefore, the results showed a greater impact of capital employed efficiency on financial performance compared to other intellectual capital constituents. Findings of this study will help decision makers and banking institutes to be aware of the importance of intellectual capital as a key factor that can improve a firm’s ability to maintain their competitive position.
The impact of internal audit practices on financial performance of banking, finance and insurance companies in Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Alagiyawanna, A.M.U.D.; Perera, K.H.
Appropriate internal audit practices help to enhance the financial performance efficiency. Internal audit is considered as the backbone supporting the accounting function of an organization. It supports to produce quality financial reporting and assets the external auditors. The purpose of this paper is to examine the impact of internal audit practices (IAP) on financial performance of banking, finance and insurance industry in Sri Lanka. The study used secondary data though annual reports of all the listed banking finance & insurance companies in Colombo Stock Exchange (CSE) in Sri Lanka for the period from 2017-2021. The internal audit practices which include Internal Audit Committee Size, Independence of Internal Audit Committee, Professional Competency, Internal Auditor Working Experience and Audit Committee Meeting were considered as independent variables and the Return on Assets was considered as dependent variable to measure the financial performance. The researcher conducted quantitative method for the purpose of data analysis and interpretation and analyzes data using the E-Views software and used the descriptive statistics, correlation analysis and regression analysis as the analytical tools. It was discovered that all variables have a positive impact on firm performance. So, the findings of the study suggest that conducting good internal audit procedures ensures the maximization of financial performance. Future studies could examine other internal audit practices such as internal process of the committee, quality of internal audit work and personal characteristics of the directors and could use primary data or a combination of primary and secondary data for different other sectors.
The Impact of Liquidity Risk on the Financial Performance of Banks and Finance companies in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, 2020) Perera, H.G.S.; Perera, K.H.
The banking and finance companies play a significant role in intermediation among depositors and borrowers. These enhance the flows of funds by lending cash to borrower, while providing liquidity to savers. Therefore, liquidity is very critical phenomenon for smooth operation of banking and finance sector business. This study aims to investigate the relationship between liquidity risk and financial performance of banking and finance companies in Sri Lanka. This study employed a sample of 12 commercial banks, 3 specialized banks and 15 finance companies. Independent variables include deposit to total assets ratio, cash reserve to total assets ratio, NPL ratio and liquidity gap while dependent variables include ROA, ROE and net profit margin. Data are retrieved from the balance sheets, income statements and notes of banks and finance companies during the period 2011 to 2019. This study employs multiple regressions to investigate the relationship between liquidity risk and financial performance of banking and finance companies. The study would be useful in developing credit operating procedures in respect of assets management that have impact on stability of banks and finance companies. This study is also useful all other sectors’ companies to assets management in accurate way. Economic factors contributing to liquidity risk are not covered in this paper and future research can be conducted by incorporating the economic factors affecting the liquidity risk.
Impact of Related Party Transaction Disclosure on Firm Valuation: Evidence from Licensed Finance Companies Listed in Colombo Stock Exchange Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Muthukuda, M.W.A.P.; Perera, K.H.
This study was conducted to identify the impact of related party transaction disclosure on firm valuation for Licensed Finance Companies (LFCs) listed in Colombo Stock Exchange (CSE) Sri Lanka. Related party disclosures significantly affect the decisions made by potential investors and other stakeholders of the listed LFCs as a company can manipulate the company's financial performance by non-disclosure of significant related party transactions. Listed entities must comply with the rules and regulations in Sri Lanka and they are monitored by the Central Bank of Sri Lanka (CBSL). As a result, LFCs disclose related party transactions in the financial statements to comply with LKAS 24 Related Party Transaction Disclosure (RPTD). The study used a sample of 22 of LFCs listed in CSE Sri Lanka and used the Purposive / Judgment sampling method to select the sample from the population. The secondary data were obtained from audited financial statements and annual reports for a period of 5 years from 2015 to 2020. In addition, Related Party Transaction Disclosure (independent variable) was measured using the evaluation scheme of KPMG (KPMG, 2019) based on IAS 24 with slight modifications to improve comparisons across companies, avoid conflict. The dependent variable firm value was measured using Tobin's Q ratio (Nekhili & Cherif, 2011). The panel data were analyzed using E-Views. The study found that there is a negative relationship between Related Party Transaction Disclosure and firm valuation in the LFCs listed in CSE Sri Lanka. It is expected that the outcome of this study will lead to a better decision-making process for the potential inventors and stakeholders.
The impact of reward & recognition programs on employees‟ motivation in Commercial Bank, Sri Lanka
(2011) Jayarathna, L.C.H.; Perera, K.H.; Gunarathna, R.R.P.K.
The impact of reward & recognition programs on employees‟ motivation in Commercial Bank, Sri Lanka This study attempted to investigate the impact of reward and recognition program on employee motivation. Human resources are the most important among all the resources in an organization. To retain efficient and experienced workforce in an organization is crucial in overall performance of an organization. Motivated employees can help make an organization competitively more value added and profitable. Therefore, higher importance should go to understanding and learning about human motivation. Only when recognition and reward are treated as two distinct phenomena will the effectiveness of employee motivation initiatives be improved. The study has selected a sample from employees of the Commercial Bank Ceylon Plc in Sri Lanka. Quantitative methodology was used for the study and questionnaire method was used as the measuring instrument. Sample chosen for the study is 80 employees of Commercial Banks. A total of 150 questionnaires were distributed to respondents and a total of 100 questionnaires were collected. The four independent variables were used to measure the impact of reward and recognition on employee motivation: Payment, Promotion, Recognition, and Benefits. The objective of the study is to determine if there is a relationship between Payment, Promotion, Benefits, Recognition and employee motivation and to highlight “the impact of reward and recognition programs on employee motivation and satisfaction” The results indicate that there is a statistically significant relationship between all of the independent variables with dependent variable employee motivation; all the independent variables have a positive influence. The results of the research indicated that there is a positive significant relationship between rewards, recognition and motivation.
The Impact of the Credit Policy on the Profitability of the Listed Food, Beverage, and Tobacco Companies in Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Jayasiri, H.D.B.C; Perera, K.H.
It is evident that the decisions regarding the trade credit policy are much vital on behalf of the profitability and performance of a company. This study considered the effects of trade credit policy on profitability of the listed Food, Beverage, and Tobacco companies in Sri Lanka by considering the elements that included in the trade credit policy and the impact of them on the profitability of the selected companies. Debtors’ collection period, Debtors’ usage, Creditors’ payment period and Creditors’ usage were used as independent variables. Firm Size, Firm Liquidity and Firm Age were used as control variables. The profitability (dependent variable) was measured by using the return on assets (ROA). The population of the selected sector consisted of fifty listed companies as of 31st August 2021. Out of which 25 listed companies were selected for the sample according to Market Capitalization. The financial statements for the period starting from 2016/17 to 2020/21 were used as the sample and collected data were analyzed using E-views. Descriptive statistics, correlation, R square, sig. value and regression were used to explore the relationship between independent and dependent variables. The study provides empirical evidence that trade credits have a negative and trade debts have a positive impact on the profitability as well as liquidity level, firm sizes have a positive impact on profitability, but firm age has a negative relationship on profitability.
Ownership structure impact on earnings management: evidence from industrial sector companies in Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Amarasinghe, M.S.H.; Perera, K.H.
To eliminate costs arising from agency problem, entities are using various methods like issuing shares for managers, directors, etc. Through that an entity would be able to eliminate conflicts between directors and shareholders up to a certain extent. Sharing ownership with directors caused earnings management and it is manipulating the amounts in the financial statements through management judgements to mislead stakeholders about the performance of the entity. Therefore, ownership structure of an entity provides a great impact on earnings management activities inside an entity. This study considers four ownership structures namely, concentration ownership, managerial ownership, institutional ownership and foreign ownership. The purpose of this research is to find out the relationship between ownership structure and earnings management. To measure the dependent variable, earnings management, this study has taken ‘Rahman and Shahrur model’ or the ‘Modified Jones Model’ but with additional two variables as Return on Assets (RoA) and BM (book to market ratio). This study is limited to capital goods sector and all 29 companies have taken as the sample when collecting data. Data was collected from annual reports for the period from 2017-2021 (5 years) and analyzed using regression and correlation. Findings of the study will be useful for any entity in order to manage earnings management activities inside the entity.
Stakeholders’ Perception on Auditors’ Role and Its Impact on Audit Expectation Gap, with Special Consideration to Licensed Commercial Banks in Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Prawanth, S.; Perera, K.H.
External auditor is an individual third party who express an independent opinion on the financial statements in accordance with the Sri Lanka Financial Reporting Standards (SLFRS), Sri Lanka Accounting Standards (LKAS) and Sri Lanka Auditing Standards (SLAuS). An agency relationship exists between the management of the entity and the owners of the organizations, as the management and ownership are two different parties. Therefore, the auditors are responsible for expressing an independent opinion on the quality of financial statements prepared by the Management of the entity. However, most of the stakeholders have misunderstood the responsibilities of management and the auditors and stakeholders (i.e., owners, customers, employees) expect much more from auditors in addition to expression of an opinion on the financial statements, such as investigate and prevent frauds, maintain proper internal control systems, prepare financial statements, etc. This results in an audit expectation gap. Therefore, this study was conducted to understand the stakeholder’s perception on auditor’s role and its impact on audit expectation gap. A sample of 600 shareholders, employees and customers from different licensed commercial banks were selected for the study using convenience sampling method. Information collected through questionnaires were analyzed using a statistical software package, SPSS and used descriptive analysis and sample T test for analysis of data. The study revealed that a gap exists between auditors and the stakeholders in aspects of audit responsibility, reliability and usefulness of audited financial statements. The reason behind this gap is lack of proper education and understanding regarding audit standards and audit practices. This gap can be reduced by giving adequate knowledge and awareness of audit to the stakeholders and the users of financial statements in general.
The Entrepreneurial Intention of Undergraduates in Sri Lankan Universities
(2011) Perera, K.H.; Jayarathna, L.C.H.; Gunarathna, R.R.P.K.
This paper presents evidence of factors that affect the entrepreneurial intentions of undergraduates of Sri Lankan universities. Two hundred undergraduates that represent five faculties from the leading universities in Sri Lanka were selected using convenient judgment sampling technique for the investigation. Questionnaire survey was made in collecting data. Descriptive statistics and multiple regression technique were used in analyzing data. Results reveal that social factors, psychological factors, economic factors and political and legal factors are prominent factors that lead to become entrepreneurs. Further, it was found that there is a less intention among undergraduates to be entrepreneurs compared to other employments. Unwillingness to bear risk and funding problems were found to be as main reasons for a less intention to become entrepreneur among undergraduates.