Corporate finance literature and finance practitioners have the notion that the efficient working capital management (WCM) affects firm value. This study investigates the value effect of working capital management, using a sample of 44 listed companies on the Colombo Stock Exchange (CSE) over the period 2011-2015. The CSE is currently recognized as a high growth frontier market (FM) in the world. The efficiency of WCM is measured using the Cash Conversion Cycle (CCC) and its components while firm value is measured by the Tobin Q ratio. The firm size, leverage and sales growth are used as the control variables. Using panel data regression methodology (the pooled OLS and fixed effects regressions), the study finds that CCC is inversely related to Tobin Q, suggesting that managers can create value for their shareholders by efficiently managing investment in working capital of their firms.

To find out whether the Australian IPOs are underpriced and what the determinants are, this study investigates the short-run market performance of 254 IPOs by industry, listing year and issue year over the period 2006 to 2011.To measure the short-run performance, the first listing day returns are divided into the primary market which is calculated based on the first day beginning prices and issue prices, the secondary market which is estimated based on the first day closing and opening prices and total market which is calculated based on the first day closing prices and issue prices. Then it is extended to the post-day listing analysis which includes returns up to 10 days. To find out the determinants of underpricing, this study estimates binary and multiple regression models with the offer, firm and market characteristics. The marginal probability analysis was also carried out to estimate the associated probability of each determinant which shows a directional change in the short-run market performance. The study found that overall the Australian IPOs are underpriced by 25.47% and 23.11% based on the average abnormal return (AAR) in the primary and total market, which is statistically significant at 1% and 5% level respectively. However, the secondary market analysis indicates that the Australian IPOs are overpriced by 1.55% on the AAR and it is statistically significant at 5% level. The examination of post listing returns shows that Australian IPOs are underpriced based on the average cumulative abnormal return (CAR) and it signals that investors’ wealth can be diluted due to overpricing in the long-run. The primary, total and post listing analysis shows that the industrial sector IPOs are more attractive to investors whereas the chemical and material sector IPOs are less attractive compared to other sectors. The IPO period, time to listing, listing delays, total net proceeds ratio, issue price, attached share option and the market volatility are the main determinants for the observed underpricing. The marginal probability analysis also shows that market volatility and total net proceeds ratio have a significant impact on the level of underpricing. As far as the investors’ wealth is concerned, the study shows that the short-run market performance analysis should consider both the first day return including primary and secondary market and the post-day return. Study concludes that short-run market performance is sensitive to the market, industry and listing & issue year and determinants to the model.

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Purpose The purpose of this paper is to discuss how the failed finance companies in Sri Lanka used fair value accounting practices as an opportunistic earnings management practice to launder money under weak corporate governance structures. Design/methodology/approach This paper uses a qualitative design under the philosophy of interpretivism. The case study research strategy is used inductively to investigate how fair value accounting had been used for money laundering. Findings The dishonest intention of major shareholders and board of directors had forced failed companies to misuse fair value accounting to manipulate performance and use them for personal benefits which were detrimental to the depositors and stability of the companies. The weak corporate governance structures which were developed because of regulatory forbearance were influential for manipulations. The concentrated ownership had reduced agency conflicts between shareholders and managers because major shareholders were the members of the board of directors. The appointed committees were not effective because of an inadequate number of independent directors with sufficient expertise. The reduced agency conflict between shareholders and managers has exaggerated the agency conflict with depositors. Therefore, it is recommended to dilute ownership concentration to establish good corporate governance structures and make stable institutions. Research limitations/implications This study does not discuss the dishonest fair value accounting practices of all licensed finance companies because of the sensitivity of the matter for surviving companies. Originality/value This paper is an original work of the authors which discusses how fair value accounting practices had been used to launder money in failed finance companies in Sri Lanka as an emerging market context.