ICARE 2022
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Item Sustainability reporting disclosures and its impact on firms’ financial performance: a comparative study between banking industry and insurance industry companies in the Colombo stock exchange in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Jayarathne, K.G.T.D.; Tilakasiri, K.K.Sustainability reporting integrates the organizations’ economic, environmental and social performance towards achieving better financial performance and also it has become a topical issue due to the inadequacy of a definitive model or a rigid regulatory framework in this arena. Thus, the main purpose of this study is to make a comparison between the insurance and banking sectors regarding the level of sustainability reporting disclosure (environmental, social, and economic) and its impact on the financial performance of the firm. The research is a quantitative and deductive study which is based on several theories such as legitimacy, institutional, agency, and stakeholders’ theories. The study used based on pooled data analysis of all the companies in the bank industry and the insurance industry as the sample of the study. It was derived from banking firms and insurance firms from the population of 20 industry categories of the Colombo Stock Exchange which were updated according to the Global Industry Classification Standard (GICS) on 30th September 2022. The analytical model is built on the independent variable of the sustainability reporting disclosure index and the dependent variables of the model were return on assets and return on equity. To measure the sustainability reporting disclosures, the study developed a sustainability reporting disclosure index by using a set of Global Reporting Initiative (GRI) guidelines. This GRI guideline has indicated a total of 133 sub-indicators. The result reveals how corporate sustainability reporting practices have changed over time. The findings of the study will mainly be useful for different decision-makers and stakeholders in the banking and insurance sectors; investors, regulators & standard-setting bodies, policymakers, and scholars to improve their knowledge about sustainable reporting practices.Item The impact of intellectual capital on firms’ financial performance: a comparison between banking sector and diversified financial sector in Sri Lanka.(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Maddumage, M.K.I.H.; Tilakasiri, K.K.Intellectual Capital is a value-creation concept that plays an important role in performing firms’ financial performance. The purpose of this study is to evaluate the moderating effect of the industry sector on the relationship between intellectual capital and the firm’s financial performance. Modified Value Added Intellectual Coefficient (MVAIC) methodology is used in this study for measuring the intellectual capital of the firm. Financial performance is measured by using the proxies of return on assets (ROA), return on equity (ROE), and market-to-book value (M/B) ratios. A quantitative deductive approach is applied in this study and secondary data was drawn from the published annual report of the respective banks and diversified financial sector firms for the period of 2017-2021. According to the data analysis, there was a significant positive relationship between IC and firms’ performance of Sri Lankan banks. In addition to that capital employed efficiency has a significant impact on bank performance compared to structural capital efficiency. Various Components of the IC differ across all subsectors in the diversified financial sector. Diversified financial sectors have high-value MVAIC due to a higher level of human capital efficiency. Finally, the findings of this study motivate banks and diversified financial sector management to improve knowledge management practices in their organization.Item The impact of corporate social responsibility disclosure quality on financial performance: with special reference to the listed companies in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Botheju, W.H.D.; Tilakasiri, K.K.The purpose of this study is to investigate the effect of Corporate Social Responsibility Disclosure Quality on Financial Performance. In parallel, the study focuses on several objectives; to assess the level of adoption of Corporate Social Responsibility disclosure quality in a different industry of the listed companies in Sri Lanka, to examine the relationship between Corporate Social Responsibility Disclosure Quality and the Financial Performance of the listed companies in Sri Lanka, to examine the impact of Corporate Social Responsibility disclosure quality on the Financial Performance of the listed companies in Sri Lanka. The study applied the deductive approach, and the population of the study has 294 companies representing 20 industry groups in the Colombo Stock Exchange (CSE) as at 30th September 2022. The Global Industry Classification Standard (GICS) structure consists of 11 sectors, 24 Industry groups, 69 Industries and 158 sub-industries in the Colombo Stock Exchange. The study selected 30 companies representing two sectors: The Industrial and Material sectors. The data were gathered from the annual reports of selected 30 companies from the Colombo Stock Exchange Website. The is a quantitative study, and the data are analyzed using descriptive statistical measures, correlation and regression analysis. The study attempted to examine the impact of CSR disclosures on financial performance. Hence the results of the study can be used to make different types of business decision-makers such as stakeholders, managers, regulators of the capital markets, and policymakers. Further, these findings can be used to develop a framework for corporate social responsibility reporting disclosures and setting financial reporting standards.Item Analyzing the impact of corporate social responsibility on corporate financial performance in covid-19 pandemic period: evidence from CSE listed companies in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Thenuwan, D.M.D.; Tilakasiri, K.K.The concept of Corporate Social responsibility is an important area to discuss in Sri Lankan corporate sector. Therefore, this study is mainly focused to examine the impact of the Corporate Social Responsibility activities on firm performance on pre and during COVID-19 Pandemic period while considering the four types of CSR activities that will be considering by using the GRI discloser index. The study will develop a CSR scoring model to measure CSR with considering the lack of usage of the GRI guidelines of Listed companies in Sri Lanka. This research will use the return on equity (ROE) and Return on Assets (ROA) to measure the financial performance of the organization. The population of the study is all public listed companies in Colombo Stock Exchange and sample size was 50 companies. Since Sri Lanka had faced with covid 19 during the year 2020 onwards, the analysis will be divided into 2 phases whereby 1st phase will be named as “pre-covid period” from 2015 to 2019 and the 2nd phase will be named as “Post-covid Period” from 2020 and 2021. Data will be analyzed using Descriptive Statistics, Pearson Correlation and Panel Data Regression Analysis. Mean, standard deviation, variance graphs and tables will be used to discuss the findings, according to the descriptive analysis. Regression analysis used for testing the relationship between employee, environmental, social and market corporate social responsibility and firm financial performance. Findings of this research helps to take decisions of the stakeholders of companies in Sri Lanka. Finally, such information will help the investors, decision makers, regulators, policy makers and scholars to improve their knowledge about sustainable reporting practices.Item The impact of working capital management on firm profitability of listed manufacturing companies in sri lanka.(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Wanigasooriya, W.A.P.I.; Tilakasiri, K.K.The main objective of this study is to investigate the impact of working capital management on firm profitability of listed manufacturing companies in Sri Lanka. The sample was selected for the study was 48 listed manufacturing companies in Sri Lanka, for the period from 2018 to 2022. Panel data regression analysis were bused for analyzing the data. Working capital management indicators and working capital policies are used as independent variables which comprised of number of days of account receivable, number of days of inventories, number of days of account payables, cash conversion cycle, working capital investment policies, and working capital financing polices. Return on asset is used as dependent variable. Current ratio and firm size are employed as controlled variables. Prior studies mainly focused on working capital management in the Sri Lankan context, for the current study was focused for the recent financial crisis to have changed the focus on working capital management and company business performance in the Sri Lankan companies. Therefore, this study’s special attention would have been given to the impact of working capital management on firm profitability of listed manufacturing companies in Sri Lanka during the economic crisis. There was a real challenge for Sri Lankan companies to maintain optimum level of working capital for sustaining in the new normal market. Furthermore, this finding would help firms’ managers to increase firm’s profitability. Thus, investors’ confidence would be raised in favor of Sri Lankan capital market and it would lead to the growth of economies in the future.Item Implications of accounting outsourcing decision: evidence from SMES in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Udara, J.D.N.; Tilakasiri, K.K.Decision of outsourcing is a make or buy decision that an organization decides to purchase previously they have made or a service that was performed in house. When studying about the accounting outsourcing practice it can be identified that there is a huge trend among small and medium enterprises (SMEs) to outsource their accounting function across the world. However, different countries reveal different reasons for the decision of accounting outsourcing. Further, the decision of accounting outsourcing can impact on the organization in different ways either in positive ways or negative ways. Accordingly, there is an empirical gap that can be identified relating to the developing countries. Moreover, as there are no studies which focus on the non-financial implications arising with the decision of accounting outsourcing, this study would help to fulfill the knowledge gap as well. Accordingly, the researcher followed a mixed research design and collected both qualitative and quantitative data for the analysis. Further, it selected a sample of 100 as the sample size through simple random sampling technique and a structured questionnaire was sent to the owners/ managers of manufacturing SMEs. Collected data is analyzed through correlation, analysis, regression analysis and thematic analysis. Accordingly, cost reduction, focus on core business, access to expertise and productivity improvement are considered as the factors that influence accounting outsourcing decisions. Further, it revealed that factors influence on accounting outsourcing have a positive relationship and positive impact towards accounting outsourcing decisions. Moreover, sharing confidential information with a third party, less contribution towards the SME and allocation of extra time and effort by the management were the major non- financial implications of occurring due to accounting outsourcing.Item The relationship between specific business characteristics and the disclosure of sustainability reporting. evidence from: listed food, beverage, and tobacco companies in sri lanka(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Kashini, S.A.K.K.; Tilakasiri, K.K.In today’s dynamic and challenging business environment, most of the business organizations do not provide full information on companies’ overall performance as demanded by various parties. Most stakeholders are currently interested in sustainability development. Business stakeholders now demand better knowledge about how environmental, social, and economic impacts are applied into the business strategies and decisions, while also requiring compliance in reporting on daily operations. Organizations that want to be transparent about their economic, environmental, and social activities, on the other hand, can empower stakeholders, promote effective relations with other markets, and make better investment decisions. As a result, the Global Reporting Initiative (GRI) is producing a credible, reliable and sustainable reporting framework for all types of organization. This study primarily investigates the relationship between specific business characteristics and the disclosure of sustainability reporting of the listed food, beverage and tobacco companies in Sri Lanka. Business characteristics refer the financial and operational activities of a firm, that can influence stakeholders’ decisions. This study mainly focused about four specific business characteristics. They are financial leverage, firm’s current value, firm growth and Fixed assets staleness. Even though adopting sustainability reporting is not a mandatory requirement in Sri Lanka, most of the companies voluntarily adopt sustainability reporting framework to present and disclose environment, social and economic impacts. Nevertheless, there is a research gap based on this in the Sri Lankan context. This research will use the stock price per share (VALUE), firm debt ratio (LEV), firm growth (Grow), fixed assets staleness (AGE) to measure the business characteristics. The population of the research included all the listed food, beverage, and tobacco companies and out of that population 25 companies have been selected as the sample for this study. Data will be collected from the annual reports for the period from 2017 to 2021. The study applied, descriptive statistics which describe the mode, median and standard deviation, Correlation coefficient analysis, Regression analysis, ANOVA and R Square techniques to analyze the data. According to the findings, the study will offer a better understanding of the relationship between firm specific business characteristics and the sustainability reporting disclosure, and it will be helpful for different stakeholders, such as present and potential investors, government authorities and practitioners.Item The impact of sustainability reporting practices on earnings management in listed companies in sri lanka: pre and during the covid-19 situation(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Sandakelum, E.A.I.; Tilakasiri, K.K.The main objective of this study was to evaluate the impact of sustainability reporting practices on the earnings management of companies that are listed on the Colombo Stock Exchange (CSE), under the best sustainability ratings 2021. The sample of this study was 45 listed non-financial companies in Sri Lanka that reported sustainability reported practices disclosure information for six years during 2016-2021. The independent variable was sustainability reporting practi, which consists of economic indicators, environmental indicators, and social indicators. These variables are measured by the disclosure index of sustainability reporting guidelines. The dependent variable is earning management that was measured by discretionary accruals (Modified Jones Model). Qualitative descriptive panel data analyses were used to analyze the information contained in the reports to recognize the impact of sustainability reporting practice on earning management. Research results suggest that there is a negative significant relationship between sustainability reporting practice and earning management on pre and during the Covid-19 period. There are no comprehensive changes between the impact of sustainability reporting practices and earning management on pre and during the Covid-19 situation.Item Impact of accounting information system on business performance of listed manufacturing companies in sri lanka(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Nimali, N.G.A.; Tilakasiri, K.K.This study’s main goal is to examine how accounting software affects the financial performance of listed industrial companies in Sri Lanka. In order to determine the advantages resulting from the integration of accounting information systems in their operations, manufacturing companies as well as other financial enterprises operating in the same industry should take seriously the findings of the study. The study is beneficial to other academics who are interested in the issue because it has established a framework for future research on the topic. The employees of listed manufacturing companies were the study's target groups. The sample included 50 accountants and finance officers from manufacturing companies in Sri Lanka. Since surveys guaranteed respondents' confidentiality, they were able to react freely and without fear of being exposed. Tables and pie charts were used to illustrate the quantitative data, while language was used to explain it. The results of the study demonstrated a significant correlation between AIS and financial performance. Therefore, it may be said that AIS affect financial performance. The difficulty in determining the level of financial performance effectiveness was one of the restrictions. Finally, a similar study concentrating on the impact of AIS on financial performance might be conducted.Item The impact of interest rate fluctuations on financial performance; evidence from commercial banks: a comparative study of pre and post covid- 19(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Gunawardhana, R.M.I.U.; Tilakasiri, K.K.The objective of this study is to evaluate the impact of interest rate fluctuations on the Financial Performance of Commercial banks. Thus, annual data of ten years from 2012 to 2022 has been taken for 10 listed commercial banks operating in Sri Lanka. To make substantially noteworthy results study uses Correlation and Regression analysis in order to evaluate the impact of Average Weighted lending rate (AWLR), Average weighted fixed deposit rate (AWFDR), Statutory Requirement rate (SRR) over the Financial Performance indicators; return on assets (ROA), return on equity (ROE). The result shows that when the Average Weighted Fixed Deposit Rate (AWFDR ) increases the bank's return on equity and return on asset decreases as it decreases the profitability of the bank. Statutory reserve ratio is having a strong positive relationship with the return on asset and return on equity. Thus the interest rate considerably affects the bank’s interest income. These findings are proved through Pearson correlation technique. It means banks‟ income by interest is extremely related to interest rates that show the bank’s profitability is dependent on the monetary policy tool known as interest rate. Particularly, when interest rate is high, usually the rise in lending rate is higher than the deposit rates which as a result increases the bank spread. But on the other side when interest rates are low then rise in deposit rate is higher than the lending rates. As compared to deposit rates, the rates of lending are adjusted more rapidly when interest rates increase. The target population in this study is all listed commercial banks operating in Sri Lanka. Data is collected from central banks Annual report and Publications of above Banks. The data collected was analyzed using E-views. Regression analysis was used to analyze the data and find out whether there exists a relationship between interest rate fluctuations and the performance of commercial banks in Sri Lanka during the period of pre and post Covid19.