Accounting & Finance

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  • Item
    GCC economic integration : statistical harmonization for an effective monetary union
    (Springer New York, 2012) Gurrib, Ikhlaas
    The 1970 Werner Report on economic and monetary union in the European community states a monetary union implies inside its boundaries the total and irreversible convertibility of currencies, the elimination of margins of fluctuation in exchange rates, the irrevocable fixing of parity rates and the complete liberation of movements of capital (The Werner Report of 1970). Alternatively stated, three aspects should characterize a monetary union or a currency union. These are (1) a single currency or several currencies that are fully convertible at an irrevocably fixed exchange rate, (2) union-wide monetary policy that is determined by a single central bank or a system of central banks, and (3) a sole external exchange rate policy (Masson and Pattillo 2001). This chapter follows the line of thought that uses the single currency and a monetary union interchangeably, given that exchange rates are irrevocably fixed. © Springer Science+Business Media New York 2012. All rights are reserved.
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    Impact of pulling down regulatory state barriers on uranium in Australia : is there a need in order to maintain and increase australia’s global market share of uranium?
    (Virtus Interpress, 2013) Gurrib, Ikhlaas ; Alshahrani, Saad
    This paper sets a prospective framework to study the impact of opening more mines to meet future growing demand on Australia’s economy. The structure is aimed at decomposing investments and exports variables into Uranium exports and Uranium Exploration expenditure and analyse their impacts on each State GSP (Goods State Product) and for Australia as a nation. The demand and supply factors affecting the uranium market are defragmented before providing the research methodology and data specifics. Later analysis is expected to have policy implications by serving as a guide to pull down State Regulatory barriers like those imposed currently in Queensland, which is rich with uranium deposits and allow only uranium exploration but no uranium mining. Empirical findings would suggest whether exporting the carbon free energy would add value to Australia’s different competing states and as a whole globalized economy. © 2013, Virtus Interpress. All Rights Reserved.
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    Corporate governance in Islamic perspective
    (Emerald Group Publishing Ltd., 2013-08-23) Choudhury, Masudul Alam ; Alam, Mohammad Nurul
    Purpose – The purpose of this paper is to delineate the substantially different theory and application of corporate governance idea in Islamic financial theory contrary to the perceived one in the literature. Thus, a comparative and contrasting examination of the topic is provided. Design/methodology/approach – A theoretical and extensively comparative study of the literature to bring out the objective of presenting the systemic theory of Islamic corporate governance underlying its specific epistemological foundations. Findings – The hetrodox theory of Islamic finance in regards to the theme of corporate governance is shown to be a viable alternative way of understanding this topic in the light of the particular Islamic epistemological premise. Thus, Islamic financial perspective, exemplified here in terms of corporate governance, is expounded. Research limitations/implications – Empirical extension can be made but such epistemological responses are presently not available from the Islamic financial institutions because of their imperfect premise on the epistemology of unity of knowledge and organization on which the theory of Islamic corporate governance rests. Social implications – A vast social implication of corporate govarnance is opened by its epistemological inquiry comprehending integrated decision-making and systemic complemenatrities expending across society at large. Thereby, a socio-financial theory of corporate governance in the epistemological context is elaborated upon. Originality/value – This is a pathbreaking paper premised on its epistemological approach of unity of knowledge and learning systems as a distinct contribution in the theory of corporate governance in the field of ethical socio-financial perspective. © 2013, © Emerald Group Publishing Limited.
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    The relationship between the inequality-adjusted human development index and the corruption perceptions index in Gulf Cooperation Council (GCC) major economies
    (Springer International Publishing, 2015) Gurrib, Ikhlaas
    While developed countries such as the USA will always retain the headlines, emerging markets have recently gathered attention, with countries like the United Arab Emirates (UAE) showing suppleness as a leader in carrying business, in an ever attractive environment full of economic activity and investment opportunities. International Competitiveness Reports speak highly of those prominent economies, not because of their oil riches and nonexisting tax schemes, but for exercising international standards set in the countries’ visions. Continuous efforts in building the economy has resulted in the UAE to be among the highest ranked globally. The World Economic Forum studied 144 countries in their World Competitiveness Index 2014-2015 report and ranked UAE sixth in terms of quality higher education and training and third globally in terms of infrastructure (World Economic Forum 2015). © Springer International Publishing Switzerland 2016.
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    Trade‐off Between Risk and Incentives: Evidence from New‐ and Old‐Economy Firms
    (John Wiley and Sons, 2016) Tebourbi, Imen
    The sensitivity of managerial compensation to the firm's risk is a controversial issue. While some articles find evidence supporting the agency theory that predicts a negative relationship between pay‐performance sensitivity and risk, others support the managerial ownership that predicts a positive relationship between these factors. This article reconciles these theories and provides evidence that these two theories are not conflicting, when tested properly, using industries risk characteristics. In this articled, we distinguish between new‐ and old‐economy industries, and demonstrate that managerial ownership theory applies to new‐economy firms, which are high‐tech firms that operate in more uncertain environments, whereas the agency theory applies to old‐economy firms that operate in more traditional industries. We further control for the size effect and find a positive relationship between pay‐performance sensitivity and risk for medium and large size new‐economy firms. Furthermore, we find that high‐tech companies increased their CEOs noncash compensation dramatically during the high‐tech market crash between 2000 and 2002 to cushion the fall in their CEOs wealth in the company. This caused CEOs pay‐performance sensitivity to risk to become negatively related to their firms' risk during that period. © 2016 Wiley Periodicals, Inc.
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    Corporate governance and information technology in fraud prevention and detection : evidence from the UAE
    (Managerial Auditing Journal, 2016-06-06) Halbouni, Sawsan Saadi ; Obeid, Nada ; Garbou, Abeer
    This paper aims to investigate the role of corporate governance and information technology in fraud prevention and detection within the United Arab Emirates (UAE). Design/methodology/approach: This study uses a survey of financial accountants and internal and external auditors to assess their perceptions of the effectiveness of IT and corporate governance as measured in terms of the audit committee’s effectiveness, internal audit functions, external audit functions, culture of honesty and employee training programmes in preventing and detecting fraud in the UAE. Findings: The results indicate that corporate governance has a moderate role in preventing and detecting fraud in the UAE and that IT has the same role as traditional fraud prevention and detection techniques. The results also show no significant difference between internal and external auditors in their use of technological and traditional techniques during the course of audits. Research limitations/implications: The findings suggest that the senior management and boards of directors must better understand the importance of their oversight function. The finding that a culture of honesty has a low positive impact on fraud prevention and detection in the UAE indicates that chief executive officers and boards of directors must make more efforts to set the “tone at the top†to improve the corporate environment in terms of integrity and ethics, among other factors. Furthermore, as IT and traditional techniques provide the same function, senior management and boards of directors must be alerted to the importance of developing systematic approaches to fraud investigation that involve greater reliance on technological approaches. Practical implications: The moderate role of corporate governance suggests that senior management and boards of directors must better understand the importance of their oversight function to meet their obligations and fiduciary responsibilities to stakeholders. Furthermore, greater adoption of IT to detect and prevent fraud contributes to developing a systematic approach to fraud investigation, capable of identifying unusual activity using effective software. Originality/value: This study contributes to the literature on the role of corporate governance and IT in preventing and detecting fraud, particularly for Middle Eastern countries and other emerging nations. The study may provide insights to academics and practitioners in the UAE and their international counterparts. © 2016, Emerald Group Publishing Limited.
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    Cross-Market Price Mechanism Between the US Copper Futures Market and a Newly Proposed Chinese Dollar Index
    (Springer Science and Business Media B.V., 2017) Gurrib, Ikhlaas
    Recent changes in China’s copper demand have lately received much attention due to its close relationship to the country’s economic activity. Although an emerging market, China accounts for around 40 % of the world’s copper demand and the USA is the third biggest market for exports, making it imperative to assess the relationship between copper futures prices and a newly proposed Chinese dollar index. The purpose of this study is to analyse if changes in the copper futures prices can be used as a market timing tool to predict movements in the Chinese dollar index, and vice versa. To enhance the predictive market timing ability, an adaptive relative strength index model is used to track changes in market conditions better. The analysis is conducted using both daily and weekly data over the June 2007–December 2015 period. Findings will suggest if the technical analysis tool can be used to forecast copper prices based on changes in the Chinese dollar index, or if accurate forecasts can be made on the Chinese dollar index based on movements in copper’s prices, over different frequency intervals. More importantly, this would have policy implications in that it would reveal whether global copper prices can be affected by Chinese Yuan’s movements against other major global currencies, suggesting a need for regulatory bodies to relook at the effect of non-fundamental factors on commodity and currency markets. © 2017, Springer International Publishing Switzerland.
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    Business Cycle Forecasts and Futures Volatility
    (Springer Science and Business Media B.V., 2017) Belhaj, Hanene ; Larbi, Dorra
    This chapter assesses the extent to which the US business cycle is affected by fluctuations in futures price while controlling for other macroeconomic and financial variables. We examine the usefulness of futures volatility to predict whether or not the US economy will be in a recession. Our study builds on two research veins. The first is comprised of many studies that attempt to predict business cycles by using a range of economic variables. Many of these studies emphasize the role of financial variables in macroeconomic forecasts (Estrella and Mishkin, Review of Economics and Statistics, 80(1):45–61, 1998). This role has been certainly exacerbated during the recent financial crisis of 2007–2009. The second vein originates within the literature which widely recognizes the role of financial variables such as prices of financial instruments as leading indicators (Estrella and Mishkin, Review of Economics and Statistics, 80(1):45–61, 1998). In US data for example, equity returns and the short-term interest lead GDP growth by one or two quarters (Backus et al., Asset prices in business cycle analysis (manuscript), 2007). Commodities, combined with stocks, are one of these financial instruments that were involved in the macroeconomic forecasts. Our study examines futures volatility as predictors of US recessions. The volatility of this instrument could be an indicator of the economic situation. This study aims at either confirming or invalidating that periods of economic downturns are characterized by a high volatility in the index futures market. © 2017, Springer International Publishing Switzerland.
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    Ownership concentration, dividend payout and firm performance : the case of Malaysia
    (Malaysian Economic Association, 2017) Ting, Irene Wei Kiong ; Kweh, Qian Long ; Somosundaram, Kausalyaa
    This study examines how ownership concentration affects dividend payout, and ultimately firm performance. Regression analyses are performed on a dataset spanning 11 years (2005-2015) among Malaysian publicly listed firms. The results show that shareholders with concentrated ownership play an important role in determining dividend payout and driving firm performance. Specifically, ownership concentration is associated with low dividend payout, but it improves firm performance. Overall, this study suggests that ownership concentration may also be an effective monitoring mechanism.
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    An assessment of the potential VAT revenue collection for the United Arab Emirates
    (Routledge, 2017) Gurrib, Ikhlaas
    This study analyses the effect of a 5% VAT in the UAE for the period 2018–2022. The methodology includes collection efficiency, standard tax rate and the final consumption expenditure (FCE). Various scenarios are analysed, including a constant 5% VAT for 2018–2022; increasing it by 2.39% yearly; increasing it to reach the maximum 2014 country tax rate of 27%; or increasing it to reach an average tax rate of 19.1%. The collection efficiency values of 0.4–0.7 result in a 2018–22 tax revenue to GDP range of between 1.75 and 7.84%. © 2017 Informa UK Limited, trading as Taylor & Francis Group.
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    Performance analysis of the cultural and creative industry : a network-based approach
    (John Wiley and Sons Inc., 2017-12) Lu, Wen-Min ; Kweh, Qian Long ; He, Dong‐Sing ; Shih, Jui‐Min
    The cultural and creative industries (CCIs) in Taiwan have gradually contributed to the national economy under the impetus of government policies. We employ a two-stage data envelopment analysis model with an additive efficiency decomposition approach to measure the profitability and marketability of 22 Taiwanese cultural and creative companies. Furthermore, we employ the network-based ranking approach to identify benchmark inputs/outputs, and the strengths and weakness of each company. Our empirical results show that the profitability of the cultural and creative companies is better than their marketability. Companies in the industries of publishing, creative life, popular music, and cultural content averagely perform better than those in the other three types of CCIs in terms of profitability. Companies in the creative life industry are on average more efficient than those in the other five types of CCIs in terms of marketability. The profitability/marketability matrix of cultural and creative companies is also presented. © 2018 Wiley Periodicals, Inc.
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    Board meeting frequency and financial performance : a case of listed firms in Vietnam
    (Universiti Malaysia Sarawak, 2018) Hanh, Le Thi My ; Ting, Irene Wei Kiong ; Kweh, Qian Long ; Hoanh, Lam Thi Hoang
    This study investigates the effect of board meeting frequency on the financial performance of listed firms in a fiscal year. We use 94 firms listed on Ho Chi Minh Stock Exchange from 2013 to 2015. Financial performance is measured as returns on asset, equity and sales. Results show that board meeting frequency exerts a negative effect on the financial performance of the sample firms. High board meeting frequency equates to low returns on asset, equity and sales. Overall, the quality of board meetings is an important factor that contributes to financial performance. © 2018, Universiti Malaysia Sarawak. All rights reserved.
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    Founder management, government ownership and firm performance : evidence from Malaysia
    (Faculty of Economics and Administration, 2018) Ting, Irene Wei Kiong ; Kweh, Qian Long ; Lean, Hooi Hooi ; Juan, Sui Hai
    This paper examines first, how founder CEOs affect firm performance and second, whether government ownership moderates the relationship between founder CEOs and firm performance of companies listed in Malaysia between 2002 and 2011. Firms led by founder CEOs perform better than those led by non-founder CEOs. Although a direct-effect test indicates that government ownership may be detrimental to firm performance, there exists a positive relationship between founder CEOs and firm performance in the presence of government ownership from the perspective of growth opportunities. In terms of profitability, however, government ownership may not increase return on assets. These findings suggest that the government may play a crucial role to protect investor’s wealth, especially with respect to long-term survival of a company. © 2018, Faculty of Economics and Administration. All rights reserved.
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    Ownership concentration and debt structure : evidence from top 100 PLCs in Malaysia
    (Faculty of Economics and Administration, 2018) Paramanantham, Neshaleni S. ; Ting, Irene Wei Kiong ; Kweh, Qian Long
    This study examines the impact of ownership concentration on debt structure. Based on market capitalisation, we obtained financial and governance data from Top 100 public listed companies in Malaysia for the period 2011-2015. Ordinary least squares and fixed-effect panel models were employed for examining data. The regression results showed that ownership held by the top five shareholders significantly and negatively affected long term debt and total debt ratios. The results remain qualitatively similar in both estimations using the ordinary least squares and fixedeffect panel models. In summary, this study offers some insights into how concentrated ownership influence corporate debt structure. © 2018, Faculty of Economics and Administration. All rights reserved.
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    Are key market players in currency derivatives markets affected by financial conditions?
    (LLC CPC Business Perspectives, 2018) Gurrib, Ikhlaas
    Tis study investigates if the biggest players in major foreign currencies futures markets are affected by current and previous fnancial conditions. Using root mean squared errors (RMSE), normalized RMSE, and Nash-Sutcliffe efciency, this study compares the impact of current, 1 and 2 week lags of fnancial conditions onto foreign currency futures players' net positions. Te fnancial conditions indices used are UFCI, STLFSI, NFCI and ANFCI with weekly data set from January 2007 till December 2018. Te US dollar index futures is included as a benchmark, since the fnancial conditions are based on US data and the most actively traded foreign currencies are paired against the USD. While RMSE and NRMSE gave mixed results into how current, 1 week and 2 weeks lagged Financial Conditions Indices (FCIs) values are related to speculators and hedgers' net positions, lagged NFCI captured the highest correlation with both players' net positions in Japanese Yen. 95% prediction levels encompassed the actual net positions held, including the fnancial crisis of 2008-2009. Forecasts were lower (higher) for hedgers (speculators) than actual net positions held during the same period. Comparatively, in the period 2016-2017, hedgers (speculators) net positions forecasts were higher (lower) than actual positions. Te latter could be explained by FCIs not being affected during this period's event, compared to net positions. While net positions data were stationary, excess kurtosis was present pointing to non-normal and autocorrelated series. Tis suggests the need to look into other components like non-reportable long or short positions in future analysis. © 2018 Ikhlaas Gurrib.
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    Performance of the average directional index as a market timing tool for the most actively traded USD based currency pairs
    (LLC CPC Business Perspectives, 2018) Gurrib, Ikhlaas
    The aim of this study is to test a trading system based on the average directional index, which is complemented with the parabolic stop and reverse indicator. The trend-based system is tested onto the most actively traded USD based foreign currency pairs, using both monthly and weekly data set over 2000-2018. Sharpe and Sortino measures are used to track the performance of the currency pairs, based on total risk and downside risk assumptions. Results are robust tested by decomposing the data into pre and post 2008 financial crisis. Using an investment horizon over 18 years, the reliance upon the monthly model produced lower maximum drawdowns and lesser trades than the weekly model. While Swiss Franc had the best (worse) performance in the monthly (weekly) based model, the Chinese Renminbi witnessed the worse (best) performance in the monthly (weekly) based model. Pre and post financial crisis decompositions suggest the weekly-based system is more reliable than the monthly one with relatively more trades and positive performance, where the Chinese Renminbi and Japanese Yen posted the highest Sharpe and Sortino values of 0.996 and 4.452 respectively in the post crisis period. Proportionately high level of negative returns coupled with relatively low positive Sharpe and Sortino values, however, suggest that a trading system relying on the average directional index and parabolic stop and reverse indicator to be further tested and analyzed at higher frequencies. © 2018 Nelli Heorhiadi, Oleksiy Druhov, Roksolana Vilhutska, Mariana Bets, Andrii Stoianovskyi, Mateusz Folwarski.
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    Can an energy futures index predict us stock market index movements?
    (Econjournals, 2018) Gurrib, Ikhlaas
    This paper investigates if an energy futures conditions index (EFCI) can predict movements of US major stock market indices. While various financial conditions indices provide information about the financial stress of a country, the existence of an energy conditions index, using futures markets, is scarce. Using weekly data over 1992-2017, this paper proposes an energy futures index using principal component analysis and test its predictability. The EFCI captures 95% of the variability inherent in the crude oil, heating oil and natural gas futures total reportable positions. Stability in forecast errors over different lags suggests 1 week lag is sufficient in forecasting weekly Nasdaq Composite Index, Nasdaq 100 and Russell 3000 values. 95% prediction levels support that the estimated model captures all actual market indices values, except for the 2000 technology bubble. The inability of the energy futures index in predicting stock market indices during the 2000 bubble can be explained by the poor sensitivity of energy futures to this specific event. Distributions were non-normal, not serially correlated and homoscedastic under the whole sample period, with diagnostics on pre and post technology bubble crisis showing mixed results. © 2018, Econjournals. All rights reserved.
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    The relationship between the Nasdaq composite index and energy futures markets
    (LLC CPC Business Perspectives, 2018) Gurrib, Ikhlaas
    This paper sheds light on the relationship between the Nasdaq Composite Index and a newly proposed Energy Futures Conditions Index (EFCI). While various financial conditions indices provide information about the financial stability of a country, the existence of an energy condition index, using futures markets, is scarce. Using weekly data over the period 1992-2017, this paper introduces an energy futures index using principal component analysis and test its predictability over the Nasdaq Composite Index. The EFCI captures 95% of the variability inherent in crude oil, heating oil and natural gas futures' total reportable positions. Stability in forecast errors over different lags suggests a one week lag is sufficient to forecast weekly Nasdaq Composite Index. 95% prediction levels support that the estimated model captures actual equity market index values, except for the 2000 technology bubble. Distributions of level data were non-normal, not serially correlated and homoscedastic under the whole sample period, with diagnostics on pre and post technology bubble crisis showing mixed results. While differencing ensured homoscedastic errors in the forecasting model, Granger causality supported non-causality from both energy futures and equity markets, suggesting no evidence of cross market information flows. © Ikhlaas Gurrib, 2018.
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    Audit Committee Effectiveness and Accounting Conservatism a Test of Lagged Effect
    (IGI Global, 2018) Khan, Saif Ur-Rehman ; Khan, Faisal ; Elshareif, Elgilani
    This article examines the effect of audit committee effectiveness on two measures of accounting conservatism. In addition, this article also investigates the interaction effect of four endogenous variables (i.e. firm's operating risks, leverage, managerial influence, firm's size) and three exogenous variables on relationship between audit committee effectiveness and two measures of accounting conservatism. A total of 543 sample firms are selected from the Bursa Malaysia for the period from 2004 to 2013. In addition, some information relating to audit committee and auditor quality are collected from firms' annual reports. For data analysis, panel data methodology is employed, and multiple regression analysis technique is used to test the developed hypotheses of this study. Results show that interaction effect of firm's operating risks, managerial influence, external auditor quality and capital market uncertainty found to be significant with two-year-lagged effect on both measures of conservatism. Whereas, the interaction effect of firm's leverage, firm's size and product market completion are found to be insignificant. The findings of this study contribute to the signaling theory, agency theory, reputation theory and accounting conservatism literature with lagged effect in emerging economies settings.
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    Risk management and dynamic network performance : an illustration using a dual banking system
    (Routledge, 2018-06) Kweh, Qian Long ; Lu, Wen-Min ; Nourani, Mohammad ; Ghazali, Mohd Hisyam
    This study applies dynamic network data envelopment analysis to compare a dual banking system, namely conventional and Islamic banks, with emphasis on risk measures. Non-oriented, variable return-to-scale dynamic network slacks-based measure is used to model the banking performance for the period 2008–2012. Under the consideration of risk measures, the findings highlight that Islamic banks excel in managerial efficiency while conventional banks surpass in profitability efficiency. Furthermore, the regression results find that the number of directors on the risk management committee has a positive impact on banking performance. Meanwhile, the high number of independent directors improves the profitability efficiency but worsens the managerial efficiency. © 2018 Informa UK Limited, trading as Taylor & Francis Group.