Volume 1- Issue 2- 2021
Permanent URI for this collectionhttp://repository.kln.ac.lk/handle/123456789/29481
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Item The Value Relevance of Financial Statements and Stock Price Returns: With Reference to the Companies at Colombo Stock Exchange(Department of Finance, University of Kelaniya., 2021) Lakmal, S. M. D.; Swarnapali, R. M. N. C.Purpose: The study aimed to examine whether the financial statements of the listed companies at the Colombo Stock Exchange are value-relevant and what impact they have on stock price returns. Methodology: A model based on red flag ratios that have been proven to be possible fraud indicators of falsified financial statements in various contexts was developed and employed. Furthermore, the accruals quality was measured by discretionary and non-discretionary accruals and estimated using the Modified Jones Model (MJM). Data were collected from a sample of 91 non-financial listed companies in Sri Lanka from 2014 to 2018, and panel regression analysis was utilized to achieve the study objectives. Findings: The majority of the ratios indicated poor financial performance and condition. In contrast, some ratios yielded contradicting results, attesting that financial information disseminated by financial statements of the Sri Lankan context is less value-relevant. The findings revealed that ratios of net profit to total assets and receivables to sales ratios negatively influence stock returns. The ratios of net profits to sales and working capital to total assets, on the other hand, have a positive impact. Moreover, both forms of accruals play a vital role in explaining stock price movements, with non-discretionary accruals becoming increasingly essential. The findings show that earnings variability is determined by both company conditions and managerial interventions, with business conditions appearing to be more critical. Originality / Value: The study contributes to expanding existing literature by investigating the issues of value relevance of financial statements within the Sri Lankan context, incorporating both red flags and accrual components.Item Short and Long-term Determinants of Commercial Bank Deposit Growth in an Emerging South Asian Economy: Sri Lanka(Department of Finance, University of Kelaniya., 2021) Ariyasena, D. L. M. N. K.Purpose: The purpose of this research is to examine the main factors determining the growth of commercial bank deposits in Sri Lanka for the period 1999 - 2017. Design/Methodology/Approach: The research uses micro and macro level data collected from purposive random basis. The autoregressive distributed lag approach used to determine the significant micro and macro factors of banks deposit growth. Findings: The results show that bank steadiness, the productivity of the banking sector, the large supply of capital, economic growth and inflation are important long-term determinants of deposit growth. The findings additionally show that for bank deposit mobilization, only branch expansion and large money supply are important in the short term. Originality / Value: This study divergent from the extant from the scope empirical studies that focus on the determinants of individual savings behavior in Sri Lanka. The research investigates distinctly how bank characteristics affect deposit growth in view of the short- and long-run time dimensions, thus offering a relatively groundbreaking effort arena. Research Limitations/Future Research Directions – This is based on only for a period of eighteen years and only few determinants have been used for the study due to data availability. However, this study can be extended by using other determents of bank deposits and considering a longer time horizon.Item Impact of Financial Literacy Levels among Sri Lankan Investors on Investment Choices(Department of Finance, University of Kelaniya., 2021) Tennekoon, S. T. M. S.; Liyanage, C.Purpose: The purpose of this study is to investigate the level of financial literacy among Sri Lankan investors and its impact on investment choices. Design/methodology/approach: The population of this study consisted of the individual investors of Sri Lanka. Accordingly, a sample of 352 responses were obtained through a survey which was conducted using structured self-administered questionnaire. The independent variable of the research is financial literacy with the dependent variable being the investment choice. Multinomial logistic regression was used to test the hypothesis. Findings: The results of the study revealed that the majority of investors in Sri Lanka are having low objective and subjective financial literacy. Further, the results revealed that financial literacy has a statistically significant impact on the current and future choice of different investment products as the main source of investment. Originality: Financial literacy level of individual investors was assessed by using the mean value of the financial literacy score, which has not been commonly used in the Sri Lankan context. This study further contributed to the local body of literature by analyzing the investors’ current main and secondary holdings of seven differentItem Factors Affecting Non-Performing Loan in Sri Lanka: A Qualitative Study(Department of Finance, University of Kelaniya., 2021) Keshani, A. L. A. D.; Jayatilake, L. V. K.Purpose: Comparison of NBFC’s Non-Performing loan Ratio was given a research problem to the researcher to argue that which factors will be affected to the NPL of high risky non-banking financial company of Sri Lanka as the case study. This study examines the factors affecting non-performing loans of ABC Financed Limited. The objectives were to identify the Institutional relating Factors, Customer relating factors and Remedial Mechanisms of Dealing with Non-Performing Loans. Methodology: The scope of the research was limited to ten (10) Employees of ABC Finance Limited and ten (10) Customers of ABC Financed Limited. The study adopted the general qualitative research methodology using Interpretivism paradigm, Case study strategy and Grounded Theory Approach and in-depth interviews were conducted in order to collect data, and all the interviews were recorded, transcribed and coded. Open coding, selective coding and Axial coding were done in order to get the final framework. Findings: The findings revealed, Customer relating factors also reflect in case of nonperforming loans and there are some new factors were also found as Institutional related factors. Some moderate mechanisms also found to implement for all the financial companies and Banks. Originality / Value: The study contributes to expanding existing literature by investigating the issues of value relevance of financial statements within the Sri Lankan context, incorporating both red flags and accrual components.Item Board Characteristics and Intellectual Capital Disclosures: Evidence from Sri Lanka(Department of Finance, University of Kelaniya., 2021) Chandraratne, K. A. D. P. M.; Pathirawasam, C.; Mohamed, M. S.Purpose: The purpose of this study is two-fold. First, to examine the state of intellectual capital disclosures. Second, to investigate the relationship between board characteristics and intellectual capital disclosures. Design: This study selected thirty non-financial listed companies with the highest market capitalization from the Colombo Stock Exchange in Sri Lanka. An intellectual capital disclosure index comprising 61 items was developed to understand the level of intellectual capital disclosure in the selected companies. Panel data analysis techniques were applied to test the proposed hypotheses. Findings: Results indicated that role duality and proportion of female directors have a significant and positive impact on intellectual capital disclosures. Firm leverage was found to have a significant and negative effect on intellectual capital disclosures. Insufficient empirical evidence between other corporate board characteristics and intellectual capital disclosure in Sri Lanka may be attributed to a non-mandatory corporate disclosure environment. Originality: This is among the few studies to examine the link between corporate governance and intellectual capital disclosures employing panel data in Sri Lanka. However, a discourse on the role of corporate governance and corporate disclosures is warranted in a small island developing economy with a fragile financial system like Sri Lanka. Future Research Directions – The study calls for more studies to investigate the relationship between corporate governance and intellectual capital disclosures in the case of Sri Lanka by employing data from different industries for longer periods.