Browsing by Author "Wijesinghe, M.R.P."

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Capital Structure and Firm Performance: With Special Reference to the Commercial Banks and Manufacturing Firms in Sri Lanka
(International Conference on Applied Social Statistics (ICASS) - 2019, Department of Social Statistics, Faculty of Social Sciences, University of Kelaniya, Sri Lanka, 2019) Premarathne, W.G.I.D.; Wijesinghe, M.R.P.
In addition to the other financial services, commercial banks are institutions that play a pivotal role in financial intermediation. They play an imperative role in an economy especially financing economic activities. Improvement in the performance of commercial banks would in turn increase their role in an economy (Terraza, 2015; Sufian, 2011; Pasioura & Kosmidou, 2007). In addition to that the manufacturing sector of a country plays a vital role in boosting the economy through value addition and it is the second largest sector in the Colombo Stock Exchange (CSE). Further, number of manufacturing firms in Sri Lankan context is growing rapidly, as indicated by number of companies listed on the CSE drawing our attention back to the sector today. For both the sectors, capital structure decision is an important decision since the profitability of an enterprise is directly affected by such decision. Capital structure is described as the combination of debt and equity. One crucial issue challenging to the managers today is how to determine the combination of debt and equity to achieve optimum capital structure that would minimize the firm’s cost of capital and improves return to owners of the business (Vitor & Badu, 2012). The study identified the firm size as a variable of scholarly interest, due to the fact of, it’s traditionally having much explanatory power, and an understanding of its importance, which has identified as vital for managers who operate in today’s competitive environments (Kioko, 2013). In today’s world, being on the phenomenon of economies of scale, the size of a firm is taking as a crucial factor for a firm’s success. However, modern corporate firms also, seem to be looking to increase their size so as to get a competitive edge over their competitors through multiple ways ( Luqman, Ilo, Lawal, & Fatai , 2017). The study will make multiple contributions to the literature on capital structure, firm size and financial performance through the investigation of the precise composition of capital structure and firm size that maximizes the shareholders return and impacts positively on a bank’s financial performance. And additionally, the study will come in handy to support the government, and regulators in their quest to streamline operations in the banking sector putting in mind that the economy as a whole inch on how the banking sector performs as inappropriate resource allocation can hinder the growth in the economy while paying attention on the manufacturing sector of the country parallel.
A Case Study Review of Strategic Acquisitions of Synergic PLC
(Staff Development Unit, Faculty of Commerce & Management Studies, University of Kelaniya, 2015) Morawakage, P.S.; Kulathunga, K.M.K.N.S.; Basnayake, W.B.M.D.; Wijesinghe, M.R.P.; Chandrasena, S.M.; Piyananda, S.D.P.
Synergic Holding PLC initiated operations in 1991 as a software development company. It was incorporated as a private limited company in 1998 and obtained a listing in the Colombo Stock Exchange in June 2011. Soon after the incorporation they became the sole authorized distributor for DELL Computers in Sri Lanka. Gerrys Synergic (Pvt) Ltd started as a joint venture with Gerrys Holdings (Pvt) Ltd in Pakistan, fulfilling Mr. Alok Pathirathne’s (the founder of Synergic Holdings PLC) dream of ‘going global’. Synergic Company’s move towards furniture retail, from IT related activities was the first instance they adopted the diversification strategy. At present the Synergic Holding PLC is rated as one of Sri Lanka’s most energetic and aggressive conglomerates. The diversified key sectors are Information and Communication Technology, Healthcare, Retail, Financial Services, Automobiles and Leisure. This case study specifically underlines the strategic acquisition of Rovel PLC which took place in the year 2014. Rovel PLC initiated its operations in 1989, in a small retail outlet. Today, Rovel’s flagship department store is a 36,000 square foot, lavishly appointed store and it owns 20 other outlets in many strategically important locations. Rovel operates at the top end of the retail fashion market, where it has carved out a niche through a highly focused approach targeted at the upper-middle and higher-income groups, Rovel has maintained its leadership position by providing a modern, world-class retail environment that has become the standard for the South Asian region. Rovel is not only Sri Lanka’s leading fashion brand, but with a wide array of products, it is also Sri Lanka’s only genuine department store. Rovel has achieved the status of an iconic brand with its tireless ability to reinvent itself at regular intervals. The recent acquisition of Rovel PLC by Synergic Holdings has created a major upheaval amongst the business community and the media. One main intention behind the said acquisition was Synergic’s motive of working with Parkson, the largest shareholder of Rovel. However the withdrawal of Parkson from Rovel PLC left Synergic’s efforts futile. Also after the said acquisition, Synergic’s excessive borrowings have resulted with its Fitch Rating being downgraded by two notches. The boards of directors now are contemplating about the survival of the company with its existing structure.
Detection of earnings manipulation; evidence From Sri Lanka
(International Journal of Accounting & Business Finance, 2022) Wijesinghe, M.R.P.; Perera, W.T.N.M.; Yashodha, K.A.D.H.
Stream of literature on earnings management highlighted managers' opportunistic behavior to manipulate financial information with the view of extracting numerous unethical benefits. The purpose of this study is to investigate whether earnings manipulation exists in Sri Lanka as fabricating earnings which adversely triggers to the economy as a whole. We utilized Beneish model in our study as this model is a widely accepted, successful and important fraud sensitive indicator in detecting earnings manipulation under specific accruals method. As the sample, we considered twenty listed firms from Colombo Stock Exchange (CSE) for the period of 2013 to 2017 on quarterly basis. Days Receivable Index (DSRI), Gross Margin Index (GMI), Asset Quality Index (AQI), Sales Growth Index (SGI), Depreciation Index (DEPI), Sales General and Admin Expense Index (SGAI), Leverage Index (LVGI) and Total Accruals to Total Asset Index (TATA) were used to calculate the M-Score of the model which determines the susceptible companies where earnings manipulation could exist. Results, reveals that earnings manipulation exists in the entities listed on CSE at different degrees based on financial structure of such companies operating in different sectors. Our findings facilitate regulatory authorities to enhance effectiveness of standard-setting and monitoring to eliminate dodges where earnings could be manipulated. In addition, the study contributes to the knowledge base of academics and policymakers to make effective economic decisions.
Determinants of Stock Returns: Evidence from Listed Commercial Banks in Sri Lanka
(International Conference on Business and Information (ICBI – 2019), [Accounting, Finance and Economics], Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2019) Withanage, W.S.; Yashodha, K.A.D.H.; Wijesinghe, M.R.P.
This research study attempts to investigate the determinants of stock returns using evidences from listed commercial banks in Sri Lanka. Inflation rate, GDP growth rate and Interest rate are taken as the macroeconomic determinants for this study while earnings quality measured by accruals also considered as a paramount variable. The study was carried out by using quarterly data for the period from 2010 to 2015 under the regression model, granger causality test, Vector Error Correction Model and impulse response test. Results concluded that macroeconomic variables and earnings quality except GDP growth rate have insignificant effect on stock returns of selected Listed Licensed Commercial Banks in Sri Lanka. GDP growth rate has a significant negative impact on stock returns while inflation rate has insignificant positive impact on stock returns. Earnings quality and interest rate have insignificant negative relationship on stock returns. Moreover, results showed that there is a higher response from GDP growth rate to stock returns.
The Expectation Performance Gap in Accounting Education: A Review and Comparison of Generic Skills between University Undergraduates and Chartered Accountancy Students
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, 2020) Vidanapathirana, G.T.; Wijesinghe, M.R.P.
Today accounting educators have been criticized that accounting graduates and chartered accountants do not possess the generic skills to a standard level. Given this backdrop, the main objective of this study is to compare and consider the perspective of accounting undergraduates and professional accounting students’ perceptions of the extent to which opportunities for generic skills development are exploited in Government University accounting degrees and chartered accountancy professional qualification. Generic skills are determined on the basis of prior studies and the models and a structured questionnaire was developed to ascertain the skills. Accordingly, 70 accounting undergraduates from government universities and 75 professional accounting students from chartered accounting qualification were responded to the study. Under quantitative approach to analyze the data mean ranking and the independent sample t-tests were used. The results indicate that government university educators and chartered accountancy educators should focus more on developing personal skills, inter-personal: leadership skills, interpersonal: communication skills, written communication skills. The results of satisfaction on internship time period shows that chartered accountancy course allocates sufficient time period for the generic skills development.
Initial Return of Initial Public Offerings (IPOs) and IPOs Underpricing: Evidence from Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya, 2021) Dias, D.S.M.; Wijesinghe, M.R.P.; Madhushani, P.W.G.
Initial public offering is an essential milestone for a company. It has been identified that past studies have not captured the time lag between the end date of the subscribing period, the first trading day and account for the opportunity cost of the investors as well as other market changes. Furthermore, there are limited studies available in the Sri Lankan context. This study aims to identify the factors affecting IPOs initial return and examine the level of underpricing prevailing in the Colombo stock Exchange (CSE). We considered 68 IPOs in CSE from 2006 to 2018 and employed regression analysis. ASPI Return, Sector Price/Earnings ratio, Age, Earnings Per Share, Debt Ratio, Net Asset Value, Return on Asset, Price/Earnings Ratio, Debt/Equity Ratio, Offer Price and Over Subscription Rate were the variables of the study. The results revealed that ASPI return, and oversubscription rate positively influence the market adjusted initial return (MAIR) and offer price is negatively affected. According to the level of underpricing analysis, the prevailing level of underpricing is equal to 14% and 18% for Raw Initial Return (RIR) and MAIR, respectively. Moreover, the Beverage, Food and Tobacco sector, Banking, Finance and Insurance sector and diversified holding sectors are identified as highly underpriced sectors of CSE. The study becomes novel by investigating the time lag between the end date of subscribing period and first trading day and accounting for the investors' opportunity cost and other market changes. The findings are helpful for potential investors, regulators and those who are interested in IPO investment decisions.
Most Affected Stock Market Index from Macro Economic Shocks: Evidence from Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya, 2021) Gallage, I.U.; Wijesinghe, M.R.P.; Dissanayake, D.M.U.H.
The Colombo Stock Exchange (CSE) is the only share market that operates in the Sri Lankan economy. All Share Price Index (ASPI) and Standard and Poor Sri Lanka 20 (S&P SL20) are the two stock indices that operate in the CSE. Macroeconomic factors play a vital role in determining the share market performance in a country. The purpose of this research is to identify which stock market index primarily affects macroeconomic shocks. We incorporated stock returns generated through ASPI and S&P SL20 index as dependent variables and real GDP, real interest rate, inflation rate and exchange rate as explanatory variables. We employed quarterly data from 2008 Q1 to 2018 Q2 using Vector Error Correction Model (VECM) to analyze the data. Based on the results, it can be concluded that there is a significant negative long-run relationship between macroeconomic variables and S&P SL20 index return. Further, all the macroeconomic variables have a short-run relationship with S&P return and a unidirectional relationship between S&P return and real interest rate in the short run. The results also indicate that S&P SL20 index is the most affected stock market index from macroeconomic shocks in Sri Lanka.
Relationship between Foreign Direct Investment and Exchange Rate
(Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Ranga, H.K.I.; Wijesinghe, M.R.P.
Attracting Productive Foreign Direct Investments (FDI) to Sri Lankan economy is one of the main policies of Sri Lankan Government. Therefore, FDI inflows are considered as an important component of Sri Lankan Government’s intentions to foster economic growth. This research examines the long-run and short run effects on Sri Lanka’s FDI inflows from changes in Exchange Rate. Quarterly data from 2001 to 2012 are employed in this research. The ADF unit root test reveals non-stationary in exchange rate at 5 percent level of significance. Also according to the Heteroscadactisity Test there is no any Heteroscadactisity Error in the models. Simple Granger causality test was used to identify the causality between exchange rate and foreign direct investment inflows. Findings indicate that, there is a positive effect of Exchange rate to determine the short term Foreign Direct Investment and there is no any high impact of Exchange Rate to determine the Long Term Foreign Direct Investment inflows to Sri Lanka.