bluuebunny/crossref_metadata_2025_split huggingface dataset:
Role of Liquidity Risk in Asset Pricing: Evidence from Sri Lanka
Authors: Herath H.M.K.M , Samarakoon S.M.R.K 
Published: March 2022

Securities liquidity varies over time, which leads to equity return volatility. It implies that the liquidity in the capital markets is a significant source of risk. Therefore, liquidity risk in securities is difficult to diversify and contributes to the systemic market risk. This study aims to analyze the relationship between securities returns and liquidity risk while taking into account the time-varying characteristics of illiquidity on the Colombo Stock Exchange from 2015-2019 and taking into account the effect of liquidity level, using the Generalized Method of Movements (GMM) framework model to assess the persistence of illiquidity securities contributions of the updated version of the Amihud illiquidity (Amihud, 1986) proxy to represent across time market illiquidity and to research the time-series relationship between liquidity and returns. The pricing of liquidity risk and its implications for expected returns are empirically tested using the conditional liquidity adjusted capital asset pricing model (LCAPM), where stock returns are cross-sectionally dependent on market risk and three additional betas (β1, β2 , β3 ) that capture different aspects of illiquidity and its risk. The findings reveal some support for the conditional capital asset pricing model (CAPM), but results are not robust to alternative specifications and estimation techniques. The total effect of liquidity risk is 0.11%, and illiquidity is 2.5% per year. Illiquidity premium depends on the expected transaction cost at the end of the holding period for investors' 2.5%. This makes the overall illiquidity premium of 2.61%. These estimates and the overall importance of liquidity level and liquidity risk depend on the model implied restrictions of a constant market risk premium and a fixed transaction cost. However, LCAPM has constructed conditionally; it can relax these model-implied constraints and estimate different liquidity risk premiums while also allowing transaction costs to be a free parameter. The overall liquidity risk characterized by liquidity betas with a single market risk premium is relatively small and barely significant in the restricted model. Using this unrestricted model, find that the overall illiquidity premium corresponds to 2.61%. The empirical results shed light on these channels' toal and relative economic significance and provide evidence of flight to liquidity.

Keywords: Capital Asset Pricing Model, Liquidity Risk, Liquidity beta, Generalize Method of Movement, Sri Lanka
Socio-economic, Trading Sophistication and Self-reflection on Investors’ Overconfidence Bias: Evidence from Colombo Stock Exchange
Authors: Kawshala B.A.H. , Anuradha P. A. N. S. 
Published: March 2022

Individual investor’s behavior is extensively influenced by biases that highlighted in the growing discipline of behavior finance. This study is one of another effort to assess the determinants of behavioral biases in investor’s investment decision-making. The present study has analyzed the influence of socio-economic, trading sophistication and self-reflection factors, which cause changes in the extent of overconfidence level among the individual individuals. The study analyses the perception of 243 survey responses from individual investors of Colombo Stock Exchange. A survey has been conducted to investigate the influence of determinants of overconfidence with the help of a well-structured close-ended questionnaire. The collected data are analyzed with the help of t-test, ANOVA and simple linear regression. The results show that those self-reflective males who has high education qualifications and have more investment experience are more subject to the overconfidence. The study also concludes that the investors’ age, profession and income do not influence investors' overconfidence bias. The potential limitations of the present survey can be ascribed to socially desirable responses and their difference with actual market behavior. Further, due to time and resource constraint, the data set is limited to investors of only Colombo Stock Exchange. Moreover, this study is most relevant for financial advisors, as it facilitates them in gaining a better understanding of their clients’ psychology. It can aid them in developing behaviorally modified portfolio, which best suits their clients’ predisposition, and the study is useful for the market regulators, financial educators, stock market advisors and individual investors in avoiding costly investment mistakes. Moreover, the study attempts to explore the impact of demographic and investment characteristics in one go, which makes it a valuable contribution in the existing literature.
Keywords: Colombo Stock Exchange, Overconfidence, Self-reflection, Socio-economic, Trading Sophistication
Demographic Factors and Financial Literacy among Undergraduates: Special Reference to State Universities in Sri Lanka
Authors: Bogahawaththe C.D. , Sugathadasa D.D.K. 
Published: March 2022

In recent times, financial literacy has become a blistering problem in both developing and developed countries as a significant element that permits people to insure a successful financial state. The empirical findings revealed that financial literacy among young students highly depend on demographic factors and found a number of variables to be associated with financial literacy, though the results are contradictory. Therefore, as one of dynamic segment of the society, the objective of this study is to identify whether there is any significant difference between demographic factors and financial literacy among Undergraduates in the State Universities of Sri Lanka. Hence, as proxy of demographic factors age, gender, education level, education major and year in university were employed whereas financial literacy as dependent variable. A sample of 120 undergraduates was randomly selected and surveyed, using a structured questionnaire from four State Universities. The data were analyzed through independent sample t-test and one-way ANOVA in order to test the significant difference while to study the relationship correlation analysis is used. Further, multiple regression also has been used to find the model fit and variation of the dependent variable caused by independent variables. The results of the study revealed that there is a significant difference between all the independent variables with dependent variable by indicating that female, non- management stream undergraduates along with those who are not following professional causes had lower financial literacy than others. Consequently, the study recommends relevant authorities at higher education plus with industry bodies to take necessary actions on improving the financial literacy among undergraduates by considering all streams, gender, age and education level through relevant workshops, awareness and training programs promptly.
Keywords: Demographic factors, Financial Literacy, Undergraduates
Impact of Quality of Accounting Information Systems on Organizational Effectiveness of Automobile Companies in Sri Lanka
Authors: Ranganath G.D.M. , Rajeshwaran N. 
Published: March 2022

Accounting Information System (AIS) is adopted as one of strategies to improve decision making process in the turbulent business environment. However, to enhance organizational effectiveness, which dimension of quality of AIS should be highly prioritized is still skepticism. Therefore, the study has three objectives, firstly, to identify the extent of quality of AIS of Automobile Companies in Sri Lanka. Secondly, to identify the extent of organizational effectiveness of automobile companies in Sri Lanka. Thirdly, to examine the impact of quality of AIS on organizational effectiveness of Automobile Companies in Sri Lanka. The Conceptual model has been developed by using three independent variables (system quality, information quality and service quality) and organizational effectiveness is the dependent variable. Accordingly, primary data has been collected by distributing questionnaires to 120 AIS users who were working in head office and branches as a sample from 30 automobile companies in Sri Lanka by using convenient sampling method. The collected data has been analysed by using descriptive statistics, correlation analysis, and regression analysis. The results of the study reveal that overall quality of AIS as well as organizational effectiveness is at high level in Automobile Companies in Sri Lanka. Further, the quality of AIS is showing statistically significant positive impacts on organizational effectiveness of automobile companies in Sri Lanka. The system quality as well as service quality of AIS is highly impacted on organizational effectiveness than information quality of AIS. Findings of the study are beneficial to mangers and financial executives not only to automobile companies but also it is useful to other sectors to plan for designing excellent AIS to achieve the organizational effectiveness.
Keywords: Accounting Information System, System Quality, Information Quality, Service Quality, Organizational effectiveness
Financial Literacy and its determinants: A Case of professionals’ in Sri Lanka
Authors: Madhushani P.W.G. , Rajapakse R.P.C.R. 
Published: March 2022

The main focus of this study is to identify the level of financial literacy and its determinants among professionals engaged in the fields of Medicine (Doctors), Engineering (Engineers), Management (Managers), Law (Lawyers) and other fields such as Aviation and Navigation (Captains and Pilots) as they can be considered as strategic decision makers of different fields in the country. Further they are assumed to be having accumulated wealth or excess funds for buying investment products. So, it is important to know whether they have the knowledge in effective utilization of their wealth. Study employed a descriptive survey design. A sample of 300 respondents from Colombo district was selected as it has the highest level of service sector employability. For the purpose of collecting data, a well-designed questionnaire was distributed under stratified random sampling technique based on a way that all 13 divisional secretariats in Colombo district were represented. The analysis (One-way ANOVA test results) revealed that, basic financial literacy (knowledge on time value of money, inflation, interest rates and real values) as well as the advanced financial literacy (knowledge on stocks, bonds, mutual funds, stock market, and portfolio diversification) among the respondents are at medium level, except doctors, lawyers, captains and pilots. Therefore, results concluded that all educated people are not financially literate. Linear regression results indicated that economic and financial education, self-analytical skills, monthly income level and the field of employment are as significant determinants of financial literacy. Those who are in the professions where there is lack of touch in economic and financial education are possessed with low financial knowledge. Therefore, it is important to implement a national strategy of improving economic and financial educational programmes especially for those who are not engaged in the fields of management.
Keywords: Financial literacy, Financial and Economic education, Self-analytical skills
Effect of Mergers and Acquisitions on Stock Returns: Evidence from a Frontier Market
Authors: Sarangi I. W.M.S. , Samarakoon S.M.R.K. , Wanigasekara W.A.D.K.J. 
Published: March 2022

This study examines the mergers and acquisitions on stock returns in the Sri Lankan context. The main objective of this study is to investigate the effects of mergers and acquisitions on stock returns of Sri Lankan companies and establish whether there is any relationship between mergers and acquisitions on stock returns. For the intended purposes, the impact of mergers and acquisitions on stock returns, the secondary data is used from 10 listed companies for the period from 2010 to 2019. The event study methodology is used to examine the reaction of investors to the announcement of mergers and acquisitions. The event window was 80 days, which is 40 days before and after the announcement date. The result indicates that mergers and acquisitions announcements generate positive significant Cumulative average abnormal returns (CAAR) at the event date. However, after the event date, acquirer companies exhibit very low CAAR close to zero or sometimes negative value and not statistically significant. Thus, findings suggest that the shareholders' reaction to the information content of mergers and acquisitions limited to event day. After the announcement date, the CAAR takes a gradual declining trend.
Keywords: Acquisition, Colombo Stock Exchange, Event Study analysis, Merger, Stock Return
Impact of Corporate Incentives of Finance Managers on Financial Performance of Public Listed Companies in Sri Lanka
Authors: De Livera M. S. S. 
Published: March 2022

In the context of improving financial performance of companies throughout the world, corporate incentives provided to finance managers with respect to enhanced employee performance is of paramount importance. However, this paper is based on the findings of public listed companies in Sri Lanka. Even though theories to satisfy and motivate employees through corporate incentives have been extensively studied, most researchers do have different views on major predictions on financial performance of listed companies. This paper aims to ascertain the adequacy and the level of corporate incentives of finance managers required to enhance financial performance of public listed companies in Sri Lanka. For the purpose of investigation, a quantitative study with the use of deductive method, using stratified random sampling technique consisting a sample of 200 Public Listed Companies out of a population of 306 was used. Both primary data sourced through questionnaires from the representative sample of the population and secondary data available in the annual reports of listed firms within last 5 years were used to conduct multiple correlation and regression analysis.
The obtained results were relatively according to the literature developed in the study as expounded by Fredrick Herzberg under Two Factor Theory and also by Alderfer under ERG theory. The results indicated corporate incentives have a strong effect on financial performance and a strong relationship between corporate incentives with financial performance of listed firms. Corporate incentives in the context of factors of motivation were more effective than hygiene factors as explained by Herzberg and also by Alderfer which the theoretical framework was based upon in this study.
This study recommended that public listed companies in the Colombo Stock Exchange should focus on intrinsic corporate incentives (factors of motivation) as emphasized by Herzberg than extrinsic corporate incentives (hygiene factors). This study implied that Human Resource practitioners, theorists, researchers and remuneration policy makers to consider requisite level of corporate incentives to formulate remuneration policies and procedures to mitigate, avoid and prevent discrepancies in incentive anomalies to motivate finance managers to gain successful financial growth.
Keywords: Anomalies, Deductive Method, Financial Performance, Hygiene Factors, Sample Size
Impact of Disclosure of Integrated Reporting Practices on Stakeholder Value Creation (Special References to Listed Companies in Sri Lanka)
Authors: Adhikari S.A.S.S. , Sameera T.K.G. 
Published: March 2022

The purpose of this study is to investigate the impact of disclosure of integrated reporting (IR) practices on stakeholder value creation with special reference to listed companies in Sri Lanka. IR has become a new phenomenon in Sri Lanka. The studies conducted in other countries have proved that the impact of disclosure of IR practices on stakeholder value creation varied with time, country, and method used to measure variables and relationship found is inconclusive. Therefore, this research attempts to fill this research gap by examining the impact of disclosure of IR practices on stakeholder value creation. The two independent variables were used in the study as content elements, guiding principles. The dependent variables were earning per share (EPS) and return on capital employed (ROCE). The study applied the method of content analysis. The sample of the study consists the 50 of the top-most capitalized listed companies from 2015 to 2018. The authors constructed a disclosure index based on the content elements and guiding principles of the International Integrated Reporting Council (IIRC) and measured the integrated reporting disclosure score (IRS) of each company. Three hypotheses were used to achieve study objectives, whereas hypotheses were tested by the panel regression analyses. The findings of the study statistically confirmed that IR disclosure of both content elements and guiding principles were positive and significant impact on the stakeholder value creation process. Therefore, this study infers that IR is contributing towards the stakeholder value creation and it would be useful for corporates to decide how effectively the organization can implement IR. The further study provides insights on IR adoption to the practitioners and policymakers.
Keywords: Content elements, Guiding principles, Integrated reporting, Integrated reporting framework
Financial Performance of the Firms and the Enterprise Risk Management: A Sri Lankan Perspective
Authors: Rozairo H.P. , Samarakoon S.M.R.K. , Liyanaarachchi U.S. 
Published: March 2022

Risk management and financial performances in organizations had been of mounting importance when it comes to the research arena during the past few decades and is still heavily discussed globally nowadays. The tendency is to take an all-risk encompassing overview of risk management instead of considering risk management from a narrow-based overview. This all-risk encompassing approach to risk management is usually mentioned as Corporate Risk Management. A noticeable dearth of research is there in the studies that have been done on the relationship between corporate risk management and financial performance in organizations. There are so many shreds of evidence for the statement that organizations will enhance their performance by using the corporate risk management concept. The main objective instigated during this study is that the proper match between corporate risk management and, therefore, the firm factors: namely, industry competition, firm size, firm complexity, and monitoring by the board of directors and the relationship among corporate risk management and firm performance. This study identifies the impact of corporate risk management on financial performances of Banks, Diversified Financials, Insurance, Energy, and Retailing sectors in the Colombo Stock Exchange, which include 86 companies, were considered as the population and supported a sample of 60 firms. The research began with a search for companies that indicated they were utilizing the corporate risk management concept in their annual reports covering their fiscal year 2018. The findings indicate that firms should consider the implementation of a corporate risk management system following structural variables affecting the firm. These findings will be interesting to the policymakers, future researchers, as well as to the general public and any third party who are keen on corporate risk and financial performance of Banks, Diversified Financials, Insurance, Energy, and Retailing sectors in Sri Lanka.
Keywords: contingency theory, corporate risk management index, firm performance, Sri Lanka
Human Capital Efficiency and Employee Productivity: A Comparative Analysis of the Manufacturing Sector vs. Service Sector Public Listed Companies in Sri Lanka
Authors: Wanigasekara W.A.D.K.J. , Deshika N.P.T. 
Published: March 2022

Human capital is one of the most vital organizational knowledge assets, which is a part of organizational Intellectual Capital. Therefore, it contributes to organizational competitive advantage through enhancing employee productivity. Hence, the objective of this study was to find out the relationship between Human Capital Efficiency (HCE) and Employee Productivity (EP) in manufacturing sector companies and service sector companies listed in Colombo Stock Exchange as a comparative study. Value Added Intellectual Coefficient (VAIC) is a method used to measure the value creation efficiency of a company and HCE is one component of VAIC, which has a substantial impact on EP. Therefore, it is vital for finding out the relationship between HCE and EP in the practical scenario. But, there is a dearth of studies related to the relationship between HCE and EP in Sri Lanka. This study is carried out as a solution for bridging this empirical and contextual gap. Data were collected from 25 manufacturing companies and 25 service sector companies (Hotel and travel sector) during the period from 2015 to 2019. The data were analyzed using the Pearson Correlation and regression. The results of the data analysis indicated that the relationship between HCE and EP is moderate and significant in service sector companies, while an insignificant weak relationship was found in manufacturing sector companies. Further, a significant impact of HCE on EP was found in the service sector, but that impact was not significant in the manufacturing sector. It can be concluded that service sector companies pay more attention to enhance the HCE since the knowledge and skill embedded in employees are more valuable in providing services to their customers than manufacturing sector companies. Ultimately, the results show that good HCE can indeed improve EP, which has significant meanings for investors, company management, decision-makers, and industry regulators.
Keywords: Employee Productivity, Human Capital Efficiency, Manufacturing sector, Service sector