ARS - 2013
Permanent URI for this collectionhttp://repository.kln.ac.lk/handle/123456789/171
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Item Investor behaviour in Sri Lankan Stock Market(University of Kelaniya, 2013) Peter, P.L.S.; Senaratne, B.In traditional theories of finance, it is assumed that the investors are rational. However, research on investor behaviour has documented that many investors do not always take rational investment decisions. Many studies document that their investment decisions are also influenced by behavioural factors. Behavioural finance is a relatively new branch of study in finance, where behaviour of markets is being explained through behavioural characteristics of investors. Sri Lanka being a developing or emerging market with low capitalization and moderate activity levels and high variance in performance levels, compared to even the smaller regional markets, has a unique setting in which investor risk behaviour could be analysed. The study focusses on behavioural factors of investors, with special emphasis on the demographic and psychographic factors of the individual investors. Behavioural attributes/traits were identified via a comprehensive literature review from which the conceptual framework of investor risk behaviour was developed. One hundred Individual investors investing in the CSE (Colombo Stock Exchange) were selected through probability sampling. Most important factors from the selected demographic and psychographic factors for the investor risk behaviour were filtered out from exploratory factor analysis (Principal Component Analysis). Then by applying hierarchical cluster analysis, investors were grouped into 3 separate risk groups. The three groups of investors were classified as high risk, medium risk and low risk. It was found that there was significant difference between the groups on overconfidence, age, marital status, number of dependants and the employment sector of those individual investors. Kruskal Wallis Test was used to identify whether there is a significant difference between the traits of each group.Item Dividend policy determinants and dividend stability(University of Kelaniya, 2013) Peter, P.L.S.; Fernando, V.A key decision that a company is faced with is the timing and the size of the distribution of wealth it has created to its shareholders. The company has to choose between paying out dividends now, or reinvesting it and paying it out at a later date. This choice forms the background for the dividend policy decision. This study examines the corporate cash dividend policy behaviour in Sri Lankan listed companies in two different dimensions: the type of dividend policy and major determinants of the dividend decisions, incorporating both primary and secondary data. Furthermore, it investigates the role that dividend policy plays in Sri Lanka. Primary data were assimilated through a formal questionnaire sent to 41 listed companies to assess management belief on distribution of dividends and the most influential factors that shape dividend policy decisions of investors. The Lintner Model was used to assess the stability of the dividend payouts, using panel data methodology. Secondary data on dividend information and stock prices were assimilated from information available with the CSE (Colombo Stock Exchange) for a ten year period. The analysis revealed that the most significant factors that influence the dividend policy include level of current earnings, free cash flow, stability of earnings, firm’s liquidity and financial leverage. Compared to studies in developed markets, the companies are less conscious with lagged dividend and target payout ratio, which are the main signals of stability of one’s dividend policy. Supporting the findings, the fixed effects regression model also showed that the current dividend has positive but comparatively low relationship with lagged dividends. It was also revealed that mature companies are less stable in their dividend payout than the new companies. The research findings provide evidence that Sri Lankan companies have less stable dividend policies and are less aligned with signaling effect and clientele effect on dividends.Item Impact of using information technology in local banks in Sri Lanka: A customer’s perspective(University of Kelaniya, 2013) Hettiarachchi, K.P.; Peter, P.L.S.Technological advances have revolutionized the way banks perform their financial transactions with emphasis on ‘electronic banking’. The banking industry has become virtually dependent on, and continues to invest in Information Technology (IT) to gain a competitive advantage as it has the ability to enhance differentiation of products and services delivered to customers. Although the adaptation of IT in the financial services sector is widespread, certain services like internet banking, mobile banking are still in the process of gaining acceptance in Sri Lanka. The study was conducted to uncover if Sri Lankan banks use IT as a tool to gain a competitive advantage, and as a means to enhance customer satisfaction. The most significant service quality dimensions such as access, reliability, responsiveness, security, attentiveness and communication were used for measuring customer perspective on service quality. In order to carry out the research, two questionnaire surveys were carried out among selected local banks and customers. In order to explore relationships between service quality and competitive advantage correlation statistical techniques were used. The research findings revealed that two commercial banks use IT to gain a sustained competitive advantage and has also being successful in delivering a high service quality to their customers through internet channels. It also showed that banks using internet banking have been able to improve certain service quality factors such as accessibility, responsiveness, communication, reliability and attentiveness of banking services as perceived by customers. The data revealed that one of the major obstacles for the use of internet banking is the insecurity of the customers in using such systems. Inadequate technological infrastructure, poor connectivity, customer perceptions, language barrier, password hacking and system failures are inhibiting the adoption of technology by a wider customer base. Given the competitive structure in the banking sector, it is imperative that sufficient resources are allocated to develop their IT systems and to raise awareness of customers on the security and ease of using internet based services for their routine banking operations.