Publications

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Start date: 2020End date: 2021

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    The Behaviour of Stock Prices of Sri Lankan Hotel and Travel Sector Companies: A comparison of Civil War and Easter Attack 2019
    (Department of Accountancy, University of Kelaniya, Sri Lanka., 2021) Kodithuwakku, K. A. S. S.; Samarakoon, S. M. R. K.
    This paper investigates the impact of the Civil War and the Easter Attack 2019 on the Hotel and Travel Sector, employing the Event Study Methodology that is widely used and free from deliberate interferences. The Market Model is applied to calculate the Expected Returns (Rit) by taking daily data for closing share prices of overall forty-one (41) listed companies under the Hotel and Travel sector in Colombo Stock Exchange by the particular event dates while the daily All Share Price Indices (ASPI) are considered as the market return (Rmt). The event timeline is specified considering 41 days' event window and 80 days before the event window for the estimation window. The market model is mainly based on the Ordinary Least Square (OLS) Method for estimating parameters. For analysing data, graphical analysis and t-test analysis are necessarily applied. This study concludes that terrorism is the event capable of creating an unfavourable impact on the value of the Hotel and Travel Sector companies. Especially, the Hotel and Travel Sector has provided no evidence for the semi-strong form efficiency. Further, the Hotel and Travel Sector of Sri Lanka has been adversely affected by Easter Attack 2019, collapsing the favourable economic condition developed for 10 years after the brutal Civil war. Ultimately, this study recommends getting an idea of how to upgrade the mechanism of an efficient market, which provides a platform for investors who trade securities to keep the Hotel and Travel Sector investment flow healthy and stable.
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    Does Board Structure in Commercial Banks Impact their Performance?
    (Department of Accountancy, University of Kelaniya, Sri Lanka., 2021) Jayathilaka, P. G. A. T.; Kumari, J. S.
    This study aims to determine the Impact of Board Structure on the Performance of listed Commercial Banks on the Colombo Stock Exchange. This study examines the relationship between Board Structure and Corporate Financial Performance of listed commercial banks using a sample of 12 banks listed on the Colombo Stock Exchange, based on data from 2015 to 2019. Descriptive, correlation and regression analyses were performed to achieve the study objectives. This study uses the company's performance based on the following financial performance measures: return on assets (ROA) and return on equity (ROE) and board structure consisting of board size, female board members, non-executive directors, and frequency of board meetings. Bank capital is used as the control variable in this study. The study's findings suggest that the frequency of board meetings and non-executive directors have a negative and substantial influence on ROE, while the frequency of board meetings has a significant and negative impact on ROA. Additionally, bank capital has a positive and significant impact on ROA. However, the board size, female board members, and bank capital have no significant impact on ROE while board size, non-executive directors, and female board members have no significant impact on ROA of CSE-listed commercial banks. This study contributes to the literature on corporate governance and firm performance by providing the framework that affects the relationship between board structure and firm performance in the context of listed commercial banks. The findings of the study are important for policymakers, investors, regulators, and other bankers of the country. Commercial banks listed in Colombo Stock Exchange would put more attention on the structure and quality of the board to improve their performance. Concerning the study's scope, the present study only included CSE-listed commercial banks. Thus, additional research is needed to study the entire Sri Lankan banking system and 20 business sectors. Further, this study only looked at accounting-based measures such as ROA and ROE. Tobin's Q, for example, can be employed as a dependent variable. Future studies should be done by including cross-border analysis of developing and developed countries.
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    Key Determinants of Internal Auditors’ Usage of Computer Assisted Audit Techniques in Sri Lanka
    (Department of Accountancy, University of Kelaniya, Sri Lanka., 2021) Pathmasiri, B.; Piyananda, D.
    At present global business environment is challenged through the rapid pace of technological advancement. Thus, internal auditors are also experiencing with the challenging working environment as most of the functions of the organizations are extensively getting computerized. Auditors are in the view that Computer Assisted Audit Techniques (CAATs) may increase the efficiency and effectiveness of their work. However, recent studies shown that there is a less tendency among auditors (specially the internal auditors) to use CAATs. Thus, this study aims to identify the significant variables affecting to CAATs usage level among internal auditors in Sri Lanka. Further, the study aims to assess the extent to which those variables are affect the CAATs adoption by internal auditors. Important constructs were identified referring to the Unified Theory of Acceptance and Use of Technology (UTAUT) model which is a well-known theoretical model developed in information system field. Data were collected from 75 auditors from both Big 4 and local audit firms who are engaging with the internal auditing of corporations. Data analysis was conducted through descriptive statistics, correlation analysis and multiple regression analysis. Results indicate that Performance Expectancy, Effort Expectancy, Facilitating Conditions and Social Influence have significant positive impact. The results suggest that audit firms shall create a supportive environment while establishing proper policies, investing more on management and technical infrastructures and thereby drive the CAATs usage intention of auditors.
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    Employees' Perceptions on Corporate Governance: Empirical Evidence from Sri Lanka
    (Department of Accountancy, University of Kelaniya, Sri Lanka., 2021) Fernando, A. T.; Dissanayake, D. H. S. W.; Deshika, N. P. T.
    In this study, the primary objective is to investigate employees' perceptions toward the corporate governance practices of Sri Lankan publicly traded companies. The objectives are based on the research problem and emerge through various aspects of corporate governance; components, performance implications, significant issues related to Directors, major issues affected for the company's well-being, and the current status in Sri Lankan Corporate Governance. The quantitative research approach is adopted, and primary data is gathered using a questionnaire survey with a sample of 100 respondents. The questionnaire is addressed to employees in the companies listed in the Colombo Stock Exchange, where the sample was constructed out of the top 50 companies of the highest market capitalization. The analysis is done through a validity using factor analysis and reliability test followed by an analysis of variance (ANOVA) test and chi-square analysis. The results show that employees' perceptions of corporate governance factors differ concerning the changes in the demographical factors. The results generated through this study can be beneficial for employees, managers, practitioners, and students in developing a better understanding of employee perceptions and the concept of corporate governance. Furthermore, this research constructs a scale for measuring employee perceptions of corporate governance, which has significant theoretical and practical implications.
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    The Level of Effective Internal Control System of Licensed Commercial Banks in Anuradhapura District of Sri Lanka: A Comparative Study
    (Department of Accountancy, University of Kelaniya, Sri Lanka., 2021) Vidanage, K. R.; Kumari, J. S.
    Globalization has resulted in complex business procedures and activities as a result of global organizations. In the case of banking sector procedures, complicated banking transactions and an increase in banking activity fraud have prompted a focus on the Banking Sector's Internal Control System. Every organization relies on an effective Internal Control System. Accordingly, the purpose of this research is to examine and compare the level of effective internal control systems of state-owned and private domestic commercial banks in the Anuradhapura district. The level of effectiveness of the Internal Control System was assessed using the five components of the Committee of Sponsoring Organizations (COSO) framework (Control Environment, Risk Assessment, Information and Communication System, Control Activities, and Monitoring Activities). Structured questionnaires were used to collect data from fifty respondents from state-owned and thirty respondents from private domestic commercial banks, respectively. Managers (76.25 percent response rate) and secondary officers were the most common respondents (response rate was 23.75 percent). Descriptive analysis with one-sample t-test and independent sample t-test were used to analyze the data. The results of the study indicated that the level of the effective control environment, information and communication systems, and control activities are different between State- Owned and Private Domestic Commercial Banks in Anuradhapura district, whereas the level of effective risk assessment and monitoring activities are not different between State-Owned and Private Domestic Commercial Banks in Anuradhapura district. The findings of this study will help practitioners as a guideline to get the maximum benefit of their Internal Control System.
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    Effect of Socio-demographic Factors (Age, Occupation and Education) on Behavioral Biases of Individual Investors’ Decision-making Evidence from The Colombo Stock Exchange
    (Department of Accountancy, University of Kelaniya, Sri Lanka., 2021) Gunathilaka, R. C.
    The purpose of this paper is to investigate the effect of age, occupation and education on the relationship between behavioral biases and financial decision-making of individual investors based on The Colombo Stock Exchange (CSE). This study considers overconfidence bias, representativeness bias, disposition effect and herd-mentality bias on the financial investment decision-making of individual investors, taking steps to fill the empirical gap and practice gap in Behavioral Finance context. A questionnaire was utilized to collect data and the sample consisted of 114 individual respondents. Finally, data of 100 investors was analyzed by using Partial Least Square-Structural Equation Modeling approach. The study revealed that age moderates the relationship between disposition effect and investment decisions of individual investors. Further, occupation also moderates the relationship between herd-mentality bias and individual investors’ investment decisions. This study is one of the pioneering studies examining the effect of socio-demographic factors of age, occupation and education on the relationship between behavioral biases and individual investors’ decision-making, Further, this study sheds light on the rare prior studies that relate socio-demographic factors to behavioral biases of individual investors’ decision-making, particularly in emerging markets context while expanding the extant literature in Behavioral Finance.
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    Digitalization of Environmental Tax: the right Tax Policy Reform for Nigeria
    (Department of Accountancy, University of Kelaniya, Sri Lanka., 2021) Garba, I.; Bappayaya, B.; Gambo, I.; Oluwakayode, A. M.; Ayodele, A. J.
    The paper examined different tax policy options that are currently under consideration in the Nigerian economy in supporting tax policy and its administration reforms. Online tax systems are rapidly replacing cumbersome manual-based tax reporting systems which help the ease of doing business in Nigeria by reducing human intervention in the payment and collection of tax and by extension, checks the possibility of connivance of tax officials with fraudulent taxpayers to evade tax. A quantitative method was used in generating data for the studies of which tax consultants and policymakers were randomly selected in the north-east part of the country, and free rider theory was adopted for the research work. It has been recommended that digitalizing environmental taxes is the most efficient tax policy of pursuing many environmental policy goals. There is also the need for consistency and transparency in the policies. Due to the imposition of any environmental tax requires countries to be fair, transparent and keep environmental objectives as priorities.
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    Responses of Share Returns to Macroeconomic Information: An Empirical Examination of Bank, Finance and Insurance industry in Sri Lanka
    (Department of Accountancy, University of Kelaniya, Sri Lanka., 2021) Waidyarathna, C. M.; Rajeshwaran, N.
    The purpose of this study is to examine the impact of macroeconomic variables on Share Returns of Banking, Financing, and Insurance (BFI) companies listed at the Colombo Stock Exchange (CSE). The Theory of Efficiency Market Hypothesis (EMH) is applied to investigate the research. The study used secondary data of companies listed under Banking, Finance and Insurance sector in CSE from 2010 to 2017. Macroeconomic variables include Exchange rate, Interest rate, Inflation rate and Broad Money Supply (M2). The macroeconomic data were collected from the Central Bank of Sri Lanka. Descriptive Statistics, Augmented Dickey-Fuller, unit root test, Johansen co-integration and vector error correction model were also used in analyzing the study. The co-integration test results depict the positive relation between the Total Return Indices in BFI sector with the interest rate and money supply. In contrast, the Exchange rate and inflation rate negatively affects the correlate with Total Return Index in the BFI sector. This study also emphasizes that there is no significant short-run causality from macroeconomic factors to Total Return Index (TRI). It is concluded that there is a minimum level of positive impact with interest rate and money supply in the long-run causality, while a negative effect with the exchange rate and inflation rate. The study supports the EMH, which states that it is immediately reflected in share return when new information comes into the market.
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    Sustainability Reporting and Company Financial Performance: Evidence from an Emerging Market
    (Department of Accountancy, University of Kelaniya, Sri Lanka., 2021) Eranga, W. A.; Wijesinghe, M. R. P.
    The main objective of this study is to examine the level of compliance to the sustainability practices and investigate the impact of sustainability reporting on the financial performance of Public Listed Companies in Sri Lanka. Sustainability disclosures were measured using social, economic, and environmental sustainability initiatives, and the company performance was measured through Return on Equity (ROE), Return on Assets (ROA), and Return on Sales (ROS). The study becomes original by applying an appropriate index to measure the sustainability reporting compared to the existing indexes used in Sri Lanka and applying the latest GRI 20 guidelines. In addition, the panel data regression model was employed to analyse the data from 2012 to 2019. The results suggest that social sustainability reporting has a significant positive impact on company performance measured through ROE. Henceforth, company managers, directors, and investors should focus more on fulfilling and considering the Social Sustainability Guidelines.
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    Stock Market Development and Economic Growth: Empirical Evidence from Sri Lanka
    (Department of Accountancy, University of Kelaniya, Sri Lanka., 2021) Kengatharan, L.; Vanajah, S.
    The financial markets have played a crucial role in the country's economic life for a long time. The objective of this study was to examine the empirical relationship between stock market development and economic growth in Sri Lanka. This study used annual time series data for the period from 1990 to 2018 which were collected from the annual reports of the Colombo Stock Exchange (CSE) and the Central Bank of Sri Lanka. The data were analyzed employing co-integration test, and vector error correction model (VECM). The results of VECM revealed that stock market capitalization, foreign direct investment, and inflation have a significant impact on economic growth, while turnover has not significantly influenced economic growth. The findings of the study have an important implication for the economic policymakers and government of Sri Lanka to enhance economic growth. Further, research can be extended by choosing more periods of data and choosing other indicators of stock market development indicated in previous studies.