ICARE 2023

Permanent URI for this collectionhttp://repository.kln.ac.lk/handle/123456789/27631

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Relationship between Sustainability Reporting and Corporate Financial Performance with the Moderating Effect of Corporate Governance: Evidence from the Banking Sector of Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Thilakarathna, P.M.R.M.; Wijerathne, A.G.S.H.K.
The increasing prevalence of sustainability reporting, especially about environmental, social, and governance aspects, has caused a paradigm shift in corporate assessment methods as it recognizes the necessity of ethical business operations. This study examines how environmental, social, and governance aspects, financial performance and corporate governance interact in Sri Lanka's banking industry. The sample of the study consists of 11 licensed commercial and specialized banks in Sri Lanka with the data collection period spanning from 2013 to 2022. The results indicate that there is no significant relationship between financial performance and environmental, social, and governance disclosures. However, as the results show, corporate governance moderates the insignificant relationship between environmental, social, and governance disclosures and financial performance. The study adds an intriguing new component by incorporating corporate governance as a moderating variable. The way that corporate governance and environmental, social, and governance interact has a significant moderating impact on financial performance, which highlights how important governance frameworks are in determining the impact of sustainability policies on profitability. This unique contribution of this study sheds light on the complex relationships that exist between sustainability reporting, financial performance, corporate governance, and, especially in the context of Sri Lanka's banking sector. By highlighting the moderating impact of corporate governance and illuminating the intricacy of these interactions, the research offers a novel viewpoint. The ramifications are worldwide in scope and provide valuable perspectives for banks that aim to improve their financial performance in tandem with sustainability objectives. When creating regulations and policies that support sustainable banking practices, legislators and regulators may discover helpful advice. The study's final goal vi is to support the development of a more ethically and sustainably conscious business climate in Sri Lanka by highlighting the relationships between sustainability, corporate governance, and financial performance.
Combating Money Laundering: Effectiveness of Measures Taken by Sri Lankan Banks to Comply with Regulatory Frameworks
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Perera, A.K.S.S.; Bandara, R.M.S.
Money laundering poses ongoing challenges for countries across the globe. The complexities associated with these challenges vary from one country to another, primarily due to factors such as the unique nature of their financial sectors, the specific anti-money laundering (AML) icies they have adopted, and the capabilities of their central banks in devising a comprehensive framework to address these issues effectively. To overcome these challenges and establish robust AML policies, each country must develop its framework through its central bank. This framework should aim to eliminate obstacles and enhance the effectiveness of the country's AML efforts. To accomplish this, careful identification and inclusion of relevant factors is essential. The paper aims to assess the effectiveness of measures taken by banks in Sri Lanka to comply with regulatory frameworks in combating money laundering. To do so mainly three areas are being considered such as commitment towards legislative compliances, adequate tools and devices, and employee training. To collect data a questionnaire was sent to banks of Sri Lanka and 117 responses were received the questions mainly targeted the executives and managers working at banks of Sri Lanka. SPSS statistics software was used for the data analysis part and a regression model was run considering the assumptions for to run regression model the results of the research showed that the banks of Sri Lanka are committed to legislative compliance and do have adequate tools and devices and do sufficient employee training. Apart from that research also identified that there are constraints that banks face when adapting technological advancements and international collaboration is not up to standards, so recommendations were provided such as investing in continuous technological advancements to stay competitive and aligned with global AML technological standards, AI and machine learning tools, such as natural language processing and predictive analytics, can vastly improve the effectiveness and efficiency of AML and Know Your Customer (KYC) programs by automating complex tasks, identifying patterns, and reducing false positives. The research focuses on assessing the effectiveness of measures in the banking sector in Sri Lanka, excluding non-banking financial institutions. It examines compliance requirements in employee training, legislative compliance commitment, and adequate tools. The study's scope may be limited by data availability, resources, and participant access.
The Impact of Accounting Information System on Financial Performance: Evidence from Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Fonseka, H.F.N.S.; Perera, P.R.M.R.
This research aims to assess the Impact of the Accounting Information System on the financial performance of Sri Lankan listed companies by analyzing the quality and return on assets of the accounting information. The study variables are made up of dependent and independent variables. The study represents dependent variable as financial performance, and the independent variables are System Flexibility, System Sophistication, Effectiveness of the System, and System Control. A sample size of 127 out of the 290 listed companies in Sri Lanka is obtained using a method called stratified random sampling method. A frequency analysis, descriptive analysis, correlation analysis, and simple regression analysis and multiple regression analysis have all been conducted for obtain the expected outcome of this study. Descriptive analysis indicates that Sri Lankan listed companies have high levels of both financial performance and AIS quality. The results of the regression analysis show that the impact of the accounting information system has a significant impact on the financial performance of Sri Lankan listed companies, and the correlation analysis indicates a strong relationship between the variables. Based on the results and findings, the study concludes that the accounting information system in an organization has a significant impact on financial performance and corporate success.
Enhancing Audit Efficiency and Accuracy through Artificial Intelligence
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Thakshila, M.A.T.; Gunasekara, U.L.T.P.
This research investigates the current state of adaptation of artificial intelligence (AI) adoption within the auditing sector, shedding light on the perspectives and practices of auditors across various roles and experience levels. The study employs a mixed-methods approach, combining quantitative data gathered through a structured questionnaire with qualitative insights derived from thematic analysis. The participant profile unveils a diverse representation of the auditing profession, encompassing roles from audit firm partners to supervisors and spanning experience levels from less than 5 years to more than 15 years. The distribution among small, medium, and large audit firms ensures a comprehensive exploration of AI adoption trends. Most participants find themselves in the initial stages of AI adoption, with a notable inclination toward tools like Chat GPT and Chat GPT Excel, signifying a sector in transition. Efficiency improvement emerges as the driving force behind AI adoption, aligning with the practical needs of audit firms seeking to enhance productivity. However, challenges such as integration issues, data privacy concerns, and skill gaps highlight the complexities associated with incorporating AI seamlessly into audit workflows. Qualitative findings further enrich the analysis, uncovering themes related to perceived efficiency gains and the varied impact of AI technologies on accuracy. Participants consistently emphasize the transformative effect of AI adoption on the efficiency of audit processes, indicating a positive shift in the pace and effectiveness of procedures. The exploration of accuracy reveals a spectrum of opinions, emphasizing the importance of a nuanced understanding of the contextual conditions influencing the relationship between AI adoption and audit outcomes. The implications of these findings extend to both practice and policy, offering valuable insights for auditors, audit firms, and policymakers involved in shaping responsible AI use in auditing. Recommendations guide auditors in strategic AI adoption and skill development, while educators are encouraged to incorporate AI-related skills into curricula. Acknowledging limitations, the research suggests avenues for future studies, including longitudinal analyses and cross-industry comparative studies, contributing to the ongoing discourse on AI's role in reshaping auditing practices.
Impact of dividend policy on Stock Return; Evidence from listed Companies in Colombo Stock Exchange
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Anupama, R.R.M.L.; Tilakasiri, K.K.
The major concern of this study was the impact of dividend policy on stock return of listed Companies in Colombo Stock Exchange. This research relies on secondary data which was collected from annual reports of listed companies in CSE. Data was collected from a sample of 30 companies under Listed Companies over five consecutive financial years from 2016 to 2020. Descriptive analysis and correlation analysis were used to perform the data analysis while regression model was expanded by adding two control variables named earnings per share, and size of the firm. While confirming the empirical results, the findings of this study showed a negative insignificant relationship between dividend payout ratios and stock return and a positive insignificant relation between dividend yield ratio and stock return. Moreover, there is a positive association between stock return and earnings per share, but a negative correlation between stock return and firm size and book value. Based on the finding of this study, dividend payout ratio and dividend yield have negative impact on stock return.
Public Debt and Economic Growth: Comparison among Sri Lanka, India and Bangladesh
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Udayangi, W.P.; Perera, W.T.N.M.
Public debt is one of the main macroeconomic indicators that show a country's position in the global market. This research endeavors to conduct a comparative analysis of the relationship between public debt and economic growth among three prominent South Asian nations: Sri Lanka, India, and Bangladesh. Each country possesses unique economic dynamics, making it imperative to scrutinize the impact of public debt on economic growth within this regional context. This study aims to examine whether an increase in public debt has a positive or negative effect on the economic growth rate in these nations. Three South Asian countries namely Sri Lanka, India, and Bangladesh were selected as the sample of this study. Data will be collected from mainly World Bank Indicators for the period from 1975 to 2021. In this study, descriptive and analytical research designs were primarily used to analyze the data. This research study is composed of five independent variables representing Domestic debt, long-term external debt and short-term external debt, and interest payment. The major findings of this research are the independent variables domestic debt and external debt have negative coefficients of -1.62379 and -0.28379 respectively. But, domestic debt appears to have no significant effect. Also, the research found that there is a positive relationship between long-term external debt, short-term external debt, and interest payment with countries' economic growth. The research emphasizes the necessity for tailored debt management strategies and fiscal policies suiting the specific economic conditions of Sri Lanka, India, and Bangladesh. Understanding the unique dynamics of debt and economic growth in each nation is crucial for formulating effective policies that foster sustainable development.
The Impact of E-Banking Practices on Customer Satisfaction in Public Sector Banks in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Jayarathna, H.A.S.U.; Gunasekara, U.L.T.P.
An extensive literature review was conducted to understand the existing knowledge, theories and practices regarding e-banking practices, customer satisfaction and public sector banking industry in Sri Lanka. This was the basis for developing the research framework and helped identify gaps in the existing literature. The research methodology is quantitative methods. Structured surveys were used to gather primary data from a subset of customers of Sri Lanka's public sector banks. Primary data were collected through structured surveys distributed to a specific sample of customers from public sector banks in Sri Lanka. The purpose of this survey is to measure customer satisfaction levels, assess usage of e-banking services, identify challenges faced by customers and understand their perception of e-banking practices. Quantitative data analysis techniques such as regression analysis, correlation analysis, and descriptive statistics were used to analyze the survey responses and draw meaningful conclusions regarding the impact of e-banking practices on customer satisfaction. Research findings revealed that while there is significant inclination towards e-banking services among customers, challenges such as limited awareness, security concerns and usability issues have hindered the full uptake and satisfaction of these services. The study on e-banking practices such as online banking, ATM and CDM services, Mobile banking and digital wallets and payment applications showed significant interest among customers in public sector banks in Sri Lanka. By improving awareness, simplifying interfaces and security measures, e-banking practices can be improved, fostering greater customer satisfaction.
Investigating Factors that Influence Customer Usage of Online Banking: With Special Reference to Undergraduates of Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Amarathunga, S.A.H.S.; Perera, M.R.H.
In the present world, the technological revolution has given rise to new concepts and advanced methods across various fields. Online banking is one such concept that has emerged in the banking sector. While not entirely novel to Sri Lanka, the evolution of online banking in the country began in the late 1980s. Reflecting on this period, there appears to be a gradual surge in the adoption of online banking among customers. The COVID-19 pandemic has further fueled this trend, as the increased use of online platforms has contributed to a growth in online banking. Moreover, various factors influence the usage of online banking beyond the impact of the pandemic. This specific study has been conducted to examine the factors influencing the usage of online banking in Sri Lanka. Following the existing literature, four factors were identified for investigation: Perceived Usefulness, Security and Privacy, Ease of Use, and Trust in E-Bank Websites. The sample comprised 100 undergraduates in the Western province. The convenience sampling approach was used to select the sample. The study covered four government universities and three private universities in Sri Lanka. The research objectives were evaluated using quantitative methods. An online questionnaire was designed and distributed to gather the data. Frequency analysis, Descriptive statistics, and Correlation and regression analyses were conducted to gain insights and comprehend the data. The findings revealed a predominance of females, a diverse age range, and a high representation of individuals linked with government universities. The outcomes offered a comprehensive insight into the characteristics of variables, highlighting a notable level of engagement in online banking. According to the study, significant factors impacting online banking usage include perceived usefulness, security and privacy, and ease of use.
The Impact of Corporate Governance on Financial Distress: Evidence from Listed Non-financial Companies in Sri Lanka.
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Ranasinghe, R.A.L.N.; Tilakasiri, K.K.
The study's goal is to investigate the impact of corporate governance on the financial distress of Sri Lankan listed non-financial companies. The three years straight negative cash flow and negative profit measures financial distress, while board size, board gender diversification, Frequency of board meetings, Education level of the board CEO duality and audit quality are proxies for corporate governance. The effect of corporate governance practices on financial distress is evaluated using 30 individual observations of non-financial firms listed in Sri Lanka from 2018 to 2023 and a fixed effects model. Additionally, Firm size, profitability are incorporated into the study as control variables to enhance the study's findings. And financial distress is measured based on an institute having a negative profit, cash flow or worth for three years as the unique nature of financial institutions prevents traditional methods of measuring financial distress, such as the Altman Z score model. In this study, descriptive analysis, corporate governance comparison model and regression analysis are used to analyze the data. The analysis results indicated that the following corporate governance variables, board size (BS), board gender diversification (BGD), frequency of board meetings (FBM), higher audit quality (HAQ), education level of the board (ELB), and the control variable of Firm size to have a significant negative impact on financial distress. Accordingly, these findings of the study can provide a framework to identify non-financial firms that are at risk of being financially distressed.
The Impact of Working Capital Management on Firm’s Profitability: Listed Companies in Sri Lankan Context
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Madushanka, R.M.D.; Madurapperuma, M.W.
Efficient working capital management plays a pivotal role in determining a firm's financial health and overall profitability. This study investigates the relationship between working capital management and the profitability of listed companies in the context of Sri Lanka. Through a comprehensive analysis of financial data, the research aims to uncover the intricate dynamics that govern the impact of working capital management practices on the financial performance of these companies. The methodology involves an in-depth examination of the financial statements of selected listed companies, employing key indicators such as the Cash Conversion Cycle (CCC), Receivables Turnover, Inventory Turnover, and Payables Turnover. The findings of this study provide valuable insights for both academia and practitioners by contributing to the existing body of knowledge on the relationship between working capital management and firm profitability. Understanding these dynamics is crucial for companies in Sri Lanka as they strive to enhance their financial performance in a competitive and evolving market. Moreover, the research aims to offer practical recommendations for listed companies in Sri Lanka to improve their working capital management practices, thereby fostering sustained profitability and financial resilience. The implications of this study extend beyond the Sri Lankan context, serving as a reference for businesses globally seeking to refine their working capital strategies for enhanced financial sustainability.
The Relationship between Dividend Policy and Share Price Volatility: A Comparison between the Sri Lankan Banking Sector and Diversified Financial
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Yasappriya, S.D.A.; Sujeewa, G.M.M.
This study aimed to investigate how dividend policy affects the share price of the Sri Lankan banking sector and diversified financial markets for the period 2018–2022. This study mainly focuses on dividend decisions, as they are considered a significant factor in examining the share price volatility of a company. Shareholders’ wealth directly relates to the value of the firm, measured using the market price of shares. There are thirty (30) banks and sixty-six (66) diversified financial sector companies. The study is based on a sample of twelve (12) listed licensed commercial banks, two (2) listed licensed specialized banks under the banking sector, and the diversified financial sector, which selected eighteen (18) licensed finance companies considering market capitalization. This research used secondary data and data taken from the annual reports during the six years (2018–2022). The independent variables are dividend payout ratio, dividend yield, and dividend per share. The dependent variable is share price volatility. Panel data was used to analyze the impact of dividend policy on firms’ share price volatility in the Sri Lankan banking sector and the diversified financial sector. Dividend payout ratio, dividend yield, and dividend per share have a significant positive impact on share price volatility in the banking sector. Dividend payout ratio, dividend yield, and dividend per share have a significant positive impact on share price volatility in the diversified financial sector.
The Impact of Accounting Information System on Firm Performance of Small and Medium Size Enterprises in Sri Lanka: Evidence from Western Province
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Sampath, L.L.K.R.; Perera, P.R.M.R.
This study was set to investigate the relationship between accounting information systems and the firm performance of SMEs in the Western Province of Sri Lanka. Specifically, the study examined the relationship between system quality and firm performance, assessed the relationship between information quality and firm performance, and analyzed the relationship between system threats and firm performance of SMEs in Western Province. A survey design was adopted, and a sample of 144 SMEs was selected from all 240 SMEs established in the Western Province. The findings of the study were based on correlation analysis and regression analysis. The findings of the study revealed the following key insights: First, accounting information systems had a statistically significant impact on firm performance. Further, the study established that system quality had a statistically positive and significant impact on firm performance. The study also revealed that information quality had a statistically significant impact and a positive relationship with firm performance. Finally, the study revealed that system threats have a statistically negative relationship with firm performance, and there is no significant impact on system threats and firm performance. The study concluded that accounting information systems are critical to producing quality accounting information on a timely basis and ensuring that all levels of management get sufficient, adequate, relevant, and true information for planning to increase control and enhance the performance of a firm. The study recommends that SMEs need a well-designed and operating accounting information system to enable them to manage their most valuable resource, which is information. Further research should include intervening and moderating variables and studying this effect, and further research may conduct longitudinal studies that may study the relationship over a long period of time.
The Impact of Perceived Retaliation Threat on Whistleblowing Intention in Sri Lankan Banking Industry
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Kulathunga, Y.O.; Gunasekare, U.L.T.P.
This study examines the factors influencing whistleblowing intentions in the Sri Lankan Banking Industry, focusing on the role of perceived retaliation threat compared to attitudes and subjective norms. Using a quantitative research approach, data was collected and analyzed through correlation and regression analyses to test the hypotheses of the study. The findings reveal that both attitudes and subjective norms positively influence whistleblowing intentions, with subjective norms emerging as a stronger predictor. Contrary to the existing literature perceived retaliation threat, negatively correlated with whistleblowing intention, showing that it did not significantly predict the intention to blow the whistle. This study suggests that in the context of the Sri Lankan Banking Industry, positive attitudes and the perception of supportive social norms are more influential in shaping an individual's intention to engage in whistleblowing than the fear of retaliation. The study's results contribute to the understanding of whistleblowing dynamics in a specific cultural and professional context, highlighting the importance of fostering positive organizational cultures and supportive social environments to encourage ethical whistleblowing practices. These insights are crucial for developing effective strategies and policies to support and protect whistleblowers in the banking sector.
Student’s Perception of the Auditing Profession in Sri Lanka: The Effect of Proximity and Knowledge on Auditor’s Stereotype
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Diwyanjali, T.D.U.; Kaushalya, M.D.P.
The purpose of this study was to identify the correlation between proximity, knowledge, and information sources related to the auditing profession and among students in Sri Lanka. Using quantitative methods, data were collected through a questionnaire survey administered to a group of 90 undergraduate students. Statistical analyses were performed using SPSS software to clarify the interrelationships between these factors. The results show that students acquire knowledge about the auditing profession mainly through their academic training. Furthermore, students view the auditing profession as inherently attractive, offering significant prospects for career advancement, carrying a variety of responsibilities, and making significant contributions to society. In addition, students view auditing as a meticulous activity that demands a high level of responsibility. Moreover, the findings emphasize that auditors are perceived as highly competent and ethical professionals. This empirical investigation contributes significantly to the academic discourse, providing insights into the impact of proximity, knowledge, and information sources on students' perceptions of auditing. The practical implication of this research suggests that a high level of understanding of a career positively affects students' perspectives on that particular career.
The Impact of Information Technology Usage on Tax Management
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Madushan, R.D.S.D.; Rajapaksha, R.M.D.A.P.
This study examines the transformative impact of information technology on tax management in the Sri Lankan corporate sector. In the contemporary world, information technology has a wide presence and assumes a unique role across various domains. Research focuses on applying information technology to corporate tax-related activities, targeting individuals directly or indirectly involved in corporate tax activities. Using employment probability and simple random sampling, 52 respondents comprising tax consultants and accountants engaged in corporate taxation were selected. Descriptive statistics were used to analyze the demographic characteristics of the respondents and regression analysis was used to evaluate the impact of information technology on tax management. The results confirm a substantial and positively impactful relationship between Information Technology (IT) and tax management in Sri Lanka's corporate sector, highlighting the significant contribution of IT tools and systems to improving various taxation-related processes. Based on these findings, recommendations are suggested to improve the integration of information technology in tax management practices. The increasing trend of technology adoption for tax-related processes highlights the imperative of improving internet facilities, recognizing its critical role in facilitating effective tax systems. Respondents' consensus on the challenge of system malfunctions in online tax payment calls for a proactive approach, emphasizing the importance of regular system updates as a potential remedy. Additionally, addressing system congestion during critical periods is advised to optimize efficiency. The collective sentiments of respondents on the complexity of online VAT registration highlight the need to streamline and simplify registration systems to improve accessibility and user-friendliness. These recommendations advocate for strategic improvements in IT infrastructure and processes to optimize tax management practices in Sri Lanka's corporate sector.
Satisfaction of Undergraduates on E-Government Services Provided by Public Sector Entities
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Ranaweera, R.K.K.K.; Wijerathna, A.G.H.S.K.
The concept of e-government, or electronic government, services emerged as a response to the increasing digitization and technological advancements in the late 20th century. E-government services refer to the use of information and communication technologies (ICTs) to enhance and deliver government services, information, and communication to citizens. This study aims to examine the satisfaction of undergraduates with e-government services provided by public sector entities. In addition, this study also aims to identify the improvements that are required for e-government services to enhance user satisfaction in Sri Lanka. A standard questionnaire was developed to measure the demographic profile and satisfaction of undergraduates on e-government services. The questionnaire was distributed among a sample of 384 undergraduates. Undergraduates on average agree with the statement that by using the e-government portal, it is easy to find information about services as soon as possible, and for the statement that is e-government service offers helpful assistance through E-mail or other electronic means. When identifying the improvements required for e-government services, the majority of the respondents have suggested that enhancing citizen education and awareness is essential. Furthermore, respondents have suggested governments may efficiently reach a wider range of people by offering e-government services in Sinhala, English, and Tamil. To enhance government efficiency, improve citizen engagement, and foster economic and social development, satisfaction with e-government services is essential in the Sri Lankan context.
Working Capital Management on the Financial Performance of Plantation Companies in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Samarasinghe, N.D.A.K.; Madurapperuma, M.W.
The purpose of this research study was to find out the influence of working capital management on the financial performance of plantation companies in Sri Lanka. Effective working capital management is crucial for businesses as it directly affects their liquidity, profitability, and overall financial health. However, the specific impact of working capital management practices on the financial performance of plantation companies in the Sri Lankan context remains largely unexplored. The research will employ a quantitative approach, utilizing financial data from a sample of 20 plantation companies listed in the Colombo Stock Exchange from 2016 to 2022. The study would focus on Return on Assets as the key financial performance. Additionally, working capital management variables, including cash conversion cycle, inventory turnover, and receivables/payables management, will be examined to understand their influence on financial performance. Through data analysis and statistical techniques such as regression analysis, the study aimed to provide empirical evidence regarding the relationship between working capital management and financial performance in the plantation sector of Sri Lanka. The findings helped shed light on the specific working capital management strategies that positively impact financial performance and highlight areas for improvement. The findings of this study significantly deviate from the previous international studies conducted in different countries. The results divulged that working capital management and profitability are positively correlated in Sri Lankan plantation companies. The study further showed that the number of days of inventory and the number of days of accounts payable are negatively correlated with a firm’s profitability, whereas the number of days of accounts receivables and cash conversion period reveals a positive relationship with corporate profitability. Overall, this research study aims to contribute to the existing literature on working capital management and provide valuable insights into the Sri Lankan plantation industry, enabling stakeholders to make informed decisions about financial management and performance improvement strategies.
The Impact of Environmental Management Practices on the Organizational Performance of the Hotel Industry of Western Province in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Mahakumara, V.R.; Sujeewa, G.M.M.
This research article was designed to explore the Environment Management Practices (EMP) performed by the Western Province hotels in Sri Lanka and to identify the relationship that these practices have with the organizational performance of hotels. Tourist hotels registered with the Sri Lanka Tourism Development Authority (SLTDA) during the period from 2018 to 2022, with star ratings ranging from one star to five stars, have been selected as the sample for this study from which data was collected primarily by means of a questionnaire. This study was also expected to find out which Environmental Management Practice is significantly used by the Western Province hotels in Sri Lanka. This study follows a Quantitative Approach (QA) and data has been collected from tourist hotels registered with SLTDA, that have obtained star ratings ranging from one star to five stars. Data was collected through a survey questionnaire then analyzed using descriptive statistical techniques. The results of this research reveal that there is a statistically significant positive relationship between the independent variables of Waste Reduction, Water and Energy Efficiency, Environmental Communication, Education and Training on Environmental Awareness, and Managerial Knowledge of Environmental Protection. This leads to the conclusion that there is a positive impact of hotels implementing Environmental Management Practices on the Organizational Performance of the Hotel.
The Impact of Key Audit Matters Reporting on Audit Quality: Special Reference to the Commercial Banks in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Wijesinghe, M.R.N.D.; Wijerathna, A.G.H.S.K.
The concept of Key Audit Matters reporting has gained prominence in recent years to enhance transparency and improve the quality of financial reporting. Auditor experience enhances an audit's overall effectiveness, efficiency, and quality. When it comes concerning major audit issues, auditors' extensiveness of experience empowers them to focus on the most important issues, implement professional judgment, and communicate effectively with stakeholders, therefore improving the audit process and the ensuing financial statements' reliability. This research study examines the impact of Key Audit Matters reporting on audit quality specifically in the context of commercial banks operating in Sri Lanka. The existing literature shows both negative and positive impacts on the relationship between the Key Audit Matters reporting and Audit Quality and the current study is expected to examine this impact in the Sri Lankan context. The findings of this research are expected to shed light on the effectiveness of Key Audit Matters reporting as a tool to enhance audit quality within the commercial banking sector in Sri Lanka. This study identified Key Audit Matters that have a significant positive impact on audit quality. Further, the results may help regulators and standard-setting bodies in assessing the benefits and challenges associated with the implementation of Key Audit Matters reporting and may provide valuable insights for auditors and commercial banks in improving their reporting practices. Furthermore, this study contributes to the growing body of literature on audit quality and financial reporting transparency in emerging economies, particularly in the banking sector of Sri Lanka.
Impact of Liquidity Ratios on Profitability: With Special Reference to Listed Manufacturing Companies in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Rila, M.F.M.; Tilakasiri, K.K.
The ultimate goal of the companies is to enhance the wealth of the shareholders. For that purpose, liquidity and profitability play a vital role. Especially the liquidity and its management are caused to a great extent by the growth and profitability of a firm. Liquidity management becomes the most important one as inadequate liquidity may be injurious to the smooth operations of the firm as well and the excess liquidity can be disturbed to achieve greater profits. In this way, the present study is aimed to investigate the relationship between liquidity and profitability. The analysis is based on 7 manufacturing companies listed on the Colombo Stock Exchange over past five years from 2018 to 2022. Correlation and regression analysis as well as descriptive statistics were applied in the analysis and findings suggest that there is a significant relationship exists between liquidity and profitability while the Quick ratio has no significant relationship with the ROE among the listed manufacturing companies in Sri Lanka. However, there has a low degree of influence in liquidity on the profitability of manufacturing companies. The relationship between liquidity and profitability is crucial to a company's goal of maximizing shareholder wealth. The current study explores the complex link between these two financial factors in this environment, highlighting the critical role that liquidity management plays. Both too little and too much liquidity present different problems that affect a company's ability to maximize profits and run its operations effectively. This research aims to unravel the dynamics between liquidity and profitability within the Sri Lankan manufacturing sector. Analyzing data from 7 manufacturing companies listed on the Colombo Stock Exchange over five years (2018-2022), the study employs correlation and regression analysis, along with descriptive statistics. The findings reveal a significant but nuanced relationship between liquidity and profitability, highlighting that while liquidity generally influences profitability, this impact varies in magnitude. Notably, the Quick ratio demonstrates an insignificant relationship with Return on Equity (ROE), suggesting complex financial dynamics at play in these firms. Beyond financial management procedures, the study's consequences provide business executives with information on strategic planning and decision-making. It emphasizes the necessity of a well-rounded approach to liquidity management that is in line with both more general strategic goals and operational requirements. The study provides a valuable empirical perspective on financial management in emerging markets, offering opportunities for future research on sector-specific liquidity management and external economic variables' impact on profitability.