Impact of Budgetary Process on Financial Performance of Listed Companies in Sri Lanka

Retnam Uthayakumar and Yapa Hamilage Purnima Kalpani Yapa
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Retnam Uthayakumar: Senior Lecturer, Department of Commerce, Faculty of Commerce and Management, Eastern University, Sri Lanka
Yapa Hamilage Purnima Kalpani Yapa: Graduated student, Department of Commerce, Faculty of Commerce and Management, Eastern University, Sri Lanka

International Journal of Research and Innovation in Social Science, 2023, vol. 7, issue 5, 881-901

Abstract: This study examined the level and variation of the budgetary processes of the companies listed on the Colombo Stock Exchange in Sri Lanka, investigated the relationship between the budgetary processes variables and the financial performance of those companies, and evaluated the impact of those variables on their financial performance. The study was carried out using data collected from a sample of 100 listed companies randomly selected from nineteen different sectors in Sri Lanka. The degree of budgetary process practiced by the companies over some past periods was measured as a retrospective cross sectional observation with the perceived judgment of a sample of 100 managers, who each represented a company, using a five-point Likert-scaled instrument designed by the researchers. The financial performance of those companies was measured with the indicator of the average ROA as a retrospective cross sectional observation, which was calculated by the researchers referring to the annual reports of each company for the past three-year periods from 2018 to 2020. From the data analysis, it was found that the degree of budgetary process of the companies in the sector is highly perceived, it is weakly and positively correlated with the financial performance indicator, and the budgetary process variables except budgetary control have a significant impact on the financial performance of the companies across the industries. Hence, it is concluded that the budgetary process is being practiced at a high level with insignificant variations among the listed companies and has a significant relationship with and influence on the financial performance of the listed companies in Sri Lanka.

Date: 2023
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