Small and Medium Enterprises (SMEs) play an important role in every developing country contributing to the growth of the economy in many ways. The aim of this study is to identify the effect of financial management practices on performance of SMEs in Sri Lanka: Special Reference to North Central Province (NCP). Working capital management practices, Investment appraisal practices, Capital structure management practices, financial reporting & analysis practices and Accounting information system practices were identified as independent variables and Performance of SMEs was identified as the dependent variable of this study. All SMEs (nearly 2000 SMEs) operating in NCP during the year 2019 was identified as the population of this study. Out of that, 322 SMEs were selected as the sample based on disproportionate stratified random sampling method and final sample was 245 manufacturing, service and trade SMEs operating in NCP. Data was collected through a structured questionnaire distributed among SMEs functioning in NCP. Descriptive statistics and inferential statistics like Pearson correlation analysis and multiple regression analysis were used to analyze data using the SPSS package. Results of the study revealed that there is a positive effect of financial management practices on performance of SMEs. Among financial management practices, working capital management practices and capital structure management practices have a significant positive effect on SMEs performance. Keywords: Capital structure, Financial Management, Performance, Small and Medium Enterprises, Sri Lanka, Working capital.
Purpose: The purpose of this study is two-fold. First, to examine the state of intellectual capital disclosures. Second, to investigate the relationship between board characteristics and intellectual capital disclosures.Design: This study selected thirty non-financial listed companies with the highest market capitalization from the Colombo Stock Exchange in Sri Lanka. An intellectual capital disclosure index comprising 61 items was developed to understand the level of intellectual capital disclosure in the selected companies. Panel data analysis techniques were applied to test the proposed hypotheses.Findings: Results indicated that role duality and proportion of female directors have a significant and positive impact on intellectual capital disclosures. Firm leverage was found to have a significant and negative effect on intellectual capital disclosures. Insufficient empirical evidence between other corporate board characteristics and intellectual capital disclosure in Sri Lanka may be attributed to a non-mandatory corporate disclosure environment.Originality: This is among the few studies to examine the link between corporate governance and intellectual capital disclosures employing panel data in Sri Lanka. However, a discourse on the role of corporate governance and corporate disclosures is warranted in a small island developing economy with a fragile financial system like Sri Lanka.Future Research Directions -The study calls for more studies to investigate the relationship between corporate governance and intellectual capital disclosures in the case of Sri Lanka by employing data from different industries for longer periods.
Overview of the Sample Removal of Non-Trading Months 44 Benchmark for Average Returns 45 Overlapping Momentum and Contrarian Portfolios 49 V.
The purpose of the study was to identify the factors of financial management practices in SMEs background and to examine whether they impact on business performance of SMEs. A literature survey was carried out, and expert consultation was employed to develop this working paper. With the help of the literature survey and experts' consultation, the association between financial management practices (FMP) and business performance (BP) was investigated. Accordingly, there were six indicators of financial management practices were identified in the literature namely; maintaining accounting records (MAR), financial reporting preparation and analysis (FRPA), accounting information system (AIS), working capital management (WCM), investment decision (ID) and financing (FIN). In addition, dependent variable of business performance. The literature evidenced that there are associations between FMP and BP in the SMEs. This includes positive, negative and no significant correlations or impact among variables of SMEs contributors. Accordingly, this study suggested a conceptual model for testing six hypotheses to examine the association between FMP and BP. Further, this study recommends an empirical study through explorative factor analysis and confirmatory factor analysis to develop valid and reliable instruments to measure the FMP in the SMEs context. A path model was suggested to examine whether FMP influences BP in the SMEs background and further identify the moderating effect of demographic factors of gender and education level of financial management practitioners and business age of SMEs.
Management of working capital is one of the key functions in financial management. Working capital management has its impact on the liquidity and profitability of the firm. Because of its importance, this study examines the impact of working capital management on firms' profitability and firms' value in listed companies of Sri Lanka. Financial data from forty-one companies listed in the Colombo Stock Exchange for the period of four years, which comprises 205 firm-year observations were analysed using panel data regression analysis. It is revealed that the cash conversion cycle, days of accounts payable, and working capital financing policy has a significant negative impact on return on assets. Meanwhile, a significant positive effect is found between days of accounts receivable and return on assets. Further, there is a significant positive impact of firm size on both firms' profitability and firms' value. Evidence implies that firms could improve their profitability through efficient working capital management. The evidence implies that firms may improve their profitability through efficient working capital management and that would be useful to consider on maintaining optimal working capital management components and policies to ignore corporate collapse in Sri Lanka.
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