ICARE 2021
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Item Determinants of Disclosure of Key Audit Matters in Listed Companies in Colombo Stock Exchange(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Rukshan, R.; Lakshan, A.M.I.Key Audit Matters means, those matters that, in the auditor’s professional judgment, are of most significant in the audit of the financial statements of the specified period. The purpose of this study is to investigate the factors that auditors take into consideration when issuing Key Audit Matters. The research design is quantitative, with a population of non-financial companies listed in Colombo Stock Exchange in the period of 2018 – 2020, considering on the Number of Key Audit matters disclosure issued by independent auditors. This research includes the number of Key Audit Matters disclosure as dependent variable. The analysis is based on secondary data and multiple regression analysis is used to initiate the relationship between the dependent variable and independent variables. Independent variables include audit firm size, number of audit committee members, number of audit committee meetings, and the number of independent directors. Company’s characteristics includes company size, number of company’s subsidiaries, ratio of receivable and inventory to total assets, ratio of debt to equity, the earnings before interest and tax to total assets, and industry type are the control variables. This research will identify the relationship between Number of Key Audit Matters and determinants of Key Audit Matters.Item Determinants of Strategy Disclosure Quality in Integrated Reports of Listed Companies in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Thenuwara, D.J.; Lakshan, A.M.I.Investors and other stakeholders are interested in strategy disclosure as part of integrated reporting (IR). Strategy disclosure can be seen as vital information for decision-making. Disclosure of just financial information is not sufficient. The purpose of this research is to investigate at the determinants of the quality of strategy disclosure in IR adopted listed companies in Sri Lanka. Hypotheses are formulated to study the determinants of voluntary strategy disclosure based on a theoretical analysis. Descriptive analysis, Correlation analysis, and Regression analysis are used to test the hypotheses. It is based on a hand collected dataset with a previously constructed scoring model (strategy disclosure score), which is used to evaluate the quality of strategy disclosure. The sample comprises IR adopted, highest market capitalized 50 listed companies in Sri Lanka for the period 2016 – 2020. The findings indicate that size of a company, firm growth, and capital adequacy all have a significant and positive impact on voluntary strategy disclosure in integrated reports. Companies which demonstrate characteristics of large in size, growing and with capital adequacy disclose more quality information about the strategy of the organization. Firm age, financial leverage, and profitability do not have any impact on voluntary strategy disclosure in integrated reports. This study makes a contribution to strategy disclosure in IR. The findings will be useful to the practitioners and regulators in gaining a better understanding of voluntary strategy disclosures made by IR practicing listed companies in Sri Lanka.Item Impact of Integrated Reporting adoption on Firm Value of Listed Companies in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Nivanthi, R.; Lakshan, A.M.I.Traditional accounting practices became less effective with the time being tosatisfy stakeholders’ expectations. Integrated Reporting (IR) is the latest reporting innovation to eliminate the shortcomings of the traditional reporting principles. By considering those trend, this study focuses to investigate how the concept of IR affects to the value of companies those registered in Colombo Stock Exchange (CSE). This research identifies the impact & relationship between the level of IR adoption and firm value of the CSE listed companies. For this study, all IR adopted Sri Lankan listed companies were taken as population and randomly selected 50 companies were taken as sample. Data was collected from 2015 to 2020 using annual reports of selected companies. Level of integrated reporting adoption was the independent variable while profitability, market value and leverage were taken as dependent variables to substitute to the firm value. Descriptive statistics, regression analysis and correlation analysis were used to find the results. Findings of the study shows a positive relationship between IR adoption and firm value. Results of the study brings an idea to the interested parties of business, how Sri Lankan organizations’ value creation process affected as they implemented and producing Integrated Annual Reports. This research is a good motivation to companies which have not adopted integrate reporting as reporting principle. The study is beneficial to interested parties of businesses such as investors. The findings of the study contribute to the literature of IR adoption and its impact on the firm value.Item The Relationship between Sustainability Reporting and Firm Performance: An Analysis of Sri Lankan Listed Companies(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Madhushani, K.M.G.T.; Lakshan, A.M.I.Sustainability reporting (SR) and firm performance (FP) are the two factors that essential to be studied in recent years. SR is the process whereby companies disclose their economic, environmental and social impacts on society and environment as a result of their daily business activities. FP is complex term which includes different shadows of meaning as long as it relates to organizational performance. The principal objective of this research is to ascertain the Relationship between SR and FP of Listed Companies in Sri Lanka. The specific objectives include ascertaining the relationships between SR and return on assets (ROA), SR and net profit margin (NPM), SR and earning per share (EPS), SR and return on equity (ROE). The sample of the study consists of 40 companies listed on Colombo Stock Exchange during the period of year 2016-2020. Secondary data collected from the annual reports of the sample companies. The independent variables are economic performance disclosure (ECN), environmental performance disclosure (ENV) and social performance disclosure (SOC). These variables are measured by means sustainability disclosure index. The dependent variables are ROA, NPM, EPS, and ROE and those used as a measure of economic, environmental and social performance. Specific findings in this study are: both ROA and EPS have positive relationship with ECN and SOC while ENV has a negative relationship. Both NPM and ROE have positive relationship with ECN, SOC, and ENV. This study has provided empirical validation that SR is beneficial and that if this reporting system is imbibed upon; there will be significant relationship on financial performance of companies.Item Impact of Integrated Reporting on Corporate Performance in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Liyanage, L.I.D.; Lakshan, A.M.I.Integrated reporting (IR) has become a new reporting dimension in current financial reporting area. It is a concise communication about an organization’s strategy, governance, performance and prospects in the context of its external environment, leading to creation and preservation of value over short, medium and long term. This research explores how integrated reporting impact on corporate performance of listed companies in Sri Lanka. Objectives of this study include investigating the impact of the level of the IR compliance on the corporate performance and market capitalization across the listed companies in Sri Lanka. IR adopted 40 companies are selected based on stratified sampling method as the sample of the study. Data collected for 5 years from 2016 to 2020 using the annual reports of the sampled companies. Integrated Reporting score is measured using the self-constructed index representing the eight IR content elements from the IIRC framework. Performance explains using the return on equity (ROE), market value, firm size, leverage and growth. The study explores the relationship through descriptive statistics, correlation and regression analysis using E-views software. The findings revealed that there is a significant impact of return on equity, market value, firm size, leverage, growth on IR. This study contributes empirically and practically to the literature. The results will be of interest to regulators, accounting prepress, investors, Firms of developing countries who have already adopted and seeking to adopt IR in their countries.Item Nexus of Firm Characteristics and Sustainability Reporting Disclosures(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Kanchana, G.T.; Lakshan, A.M.I.A sustainability report is a report published by an enterprise about the economic, environmental and social impacts caused by its everyday activities. This study investigates the relationship between sustainability reporting (SR) and firm characteristics with relevant to the listed companies in Sri Lanka. Organizations think that business must concern the environment and society, which they operate without thinking only about the profit of the business. However, sustainability reporting is not a mandatory requirement, which every organization should follow, and it is considered as an ethical thing. Therefore, the research problem of the study is to investigate the relationship between firm characteristics and sustainability reporting disclosures. This study is identified as a quantitative study which draws on secondary data from 50 companies listed at the Colombo Stock exchange, Sri Lanka. The data collected for 5 years from 2016 to 2020. SR is measured by using a SR disclosure index. Company size (CS), industry type (IT), board size (BS), profitability (PR), leverage (LV), audit committee size (AC), liquidity (LQ) and dividend yield (DY) are taken as the firm characteristics. Multiple regression method is used for the data analysis. The results reveal that AC and LV have positive relationship with sustainability reporting disclosures while CS, IT, BS, PR, LQ and DY have no significant relationship. This research contributes to the existing literature by analyzing the relationship between firm characteristics and the sustainability reporting disclosures and findings of this study will be important to practicing companies and regulating authorities.Item Identifying the Impact of Integrated Accounting System Efficiency on the Organizational Performance in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Jayasuriya, J.S.D.; Lakshan, A.M.I.The main purpose of this study is to identify the impact of Integrated Accounting System efficiency on the organizational performance with reference to Ceylon Electricity Board. hypotheses were developed to achieve the major objectives of the study; this study examined the applicability of two theoretical perspectives of efficiency of the integrated accounting system as system quality and information quality. Those are the independent variables of the study. The survey conducted by using collected data from primary and secondary sources. Primary data was gathered from the 65 employees of Ceylon Electricity Board by using a well-structured questioner, Secondary data was collected from articles, books, internet browsing, documents and annual reports. Data analyzed using the mean values, percentages and standard deviation and presented the data by frequency tables and percentage tables. And correlation analysis and regression analysis were used to test hypotheses. According to the regression results, system quality and information quality have a significant impact on performance of the organization. The findings imply that organizational performance tend to be influenced by quality of the information. Therefore, this variable can contribute to predict the organizational performance. However, the results from the data analysis showed a negative relationship between system quality and organizational performance. The reason of this mismatch might be that employees' perspective and their attitudes towards the integrated accounting system. This study recommends Ceylon Electricity Board to improve the quality of information in order to improve the performance. Higher performance could be achieved by making accurate on time internal decisions with the support of quality information.Item The Effect of Corporate Governance Characteristics on Corporate Social Responsibility disclosures of public listed companies in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Imasha, S.H.S.; Lakshan, A.M.I.Corporate Social Responsibility is an important part of the business environment. Nowadays, it becomes an important communication mechanism between the company stakeholders and investors. The purpose of this research is to determine the level of Corporate Social Responsibility (CSR) disclosure presented in annual reports of companies listed on Sri Lanka's Colombo Stock Exchange (CSE) and to assess the impact of corporate governance characteristics on the extent of CSR disclosures. Data was collected from annual reports of 50 listed companies based on the highest market capitalization for the period of 2017-2020. Companies were selected representing all business sectors other than Banking, Finance, and Insurance companies. The findings show that various corporate governance methods are highly correlated with the level of corporate social responsibility. The importance of identifying corporate governance aspects was investigated using descriptive statistics. Correlation and regression analyses were utilized to find a mutual relationship between the independent and dependent variables. Finally, corporate governance characteristics namely board independence, audit committee, and board size are found to have a positive impact and CEO duality have a positive lower impact on the level of corporate social responsibility disclosures. The findings of this study will help practitioners and regulators in gaining a better understanding on CSR reporting of public listed companies in Sri Lanka and accordingly they can make some mechanisms to improve the important aspects and encourage other companies to engage in or increase the CSR practices for the betterment of all. This study contributes the CSR disclosures.Item Firm-Specific Characteristics and Quality of Integrated Reports – Evidence from Listed Non-Financial Companies in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Hulugalla, W.M.D.M.K.; Lakshan, A.M.I.Disclosure quality is momentous for all listed entities since they involve in the issue of shares to the general public. In recent years, attention to the new integrated reporting (IR) tool has grown in both academic and professional fields. However, this area is still little explored. The analysis of literature review revealed that there is a lack of literature on IR in developing and developed countries. The main objective of this study is to fill this gap by analyzing the nexus between firm-specific characteristics and quality of integrated reports. Independent variables of the study include three main categories: Structurerelated variables (Firm size, Debt, Firm age); Performance-related variables (profit margin, return on equity and Liquidity); and Market-related variables (Industry type, Audit firm size). The quality of integrated reports calculated by integrated reports disclosure quality index (IRDQI) which considers eight content elements, two fundamental concepts (capitals and value creation process), background, assurance and reliability, and form, is the dependent variable. Control variables comprise board size, board independence and board diversity. The sample consists of 50 non-financial companies. The data collected using annual reports for the period 2015 to 2020. Data are analyzed using descriptive statistics, correlation analysis and regression analysis. This is a significant study that analyses the impact of firm-specific characteristics as a determining factor of integrated reporting quality. The results reveal positive relationship between firm size, debt, firm age, profit margin, return on equity, industry type, audit firm size and quality of integrated reports. No significant relationship was found between liquidity and quality of integrated reports. The findings will assist current and prospective stakeholders in evaluating the expected quality of an integrated report of a company and accordingly help the better investment decisions. Further, management of the companies may understand the factors which are important to improve the quality of the integrated reports.Item Impacts of Environmental Practices on Firms’ Performance – Evidence from Listed Companies in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Chathurani., S.H.D.B.; Lakshan, A.M.I.The importance of environmental practices for a firm's performance and production strategy has been increasing at an unprecedented level across the globe. Sri Lankan government has also introduced such policies with adoption guidelines in order to comply with global requirement of environmental protection. On the other hand, regular authorities such as Institute of Chartered Accounts of Sri Lanka and Security Exchange Commission of Sri Lanka have also published reporting requirements regarding the complying with such environmental protection practices of the country. In this study, Environmental Disclosure Index used as indicators of environmental practice; ROE, ROA, Profit Margin used as measures of Performance. The sample consists of 40 listed companies at the Colombo Stock Exchange. The data collected for five years from 2015 to 2020 based on annual reports of the companies. Descriptive statistics, Correlation, Multiple regression methods used to examine the study. Most of the Sri Lankan listed companies have begun to publish their annual reports complying with these requirements adopting relevant guidelines. Accordingly, it is very important to find out the actual environmental protection practices undertaken by companies in order to find out the contribution of corporate individuals towards protection of environment. The findings revealed that there is a significant impact on Return Assets, Return on equity, Profit Margin, Firm size, Leverage on Environmental Practices on Firms Performance. This study examine contributes empirically and practically to the literature. The results will be of interest of regulators, both firms of developing and developed who have already adopted the seeking to adopt Environmental practices in their countries.