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Results in Journal Asian Journal of Finance & Accounting: 378

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Dilriukshi Yapa Abeywardhana, Katlego Magoro
Asian Journal of Finance & Accounting, Volume 9, pp 103-127; https://doi.org/10.5296/ajfa.v9i2.11761

Abstract:
This study compares how the debt capital of the listed companies operating in the wholesale and retail sectors of South Africa and Sri Lanka affect their financial performance. Objective of this study is to examine whether debt capital affects the financial performance of the wholesale and retail sector companies in South Africa and Sri Lanka. To examine the impact of debt financing on financial performance of companies over the 2011-2015 period. Fixed-effects (within) regression model was used.The findings the study confirms that debt financing, in terms of short-term debt and long-term debt, has a negative impact on the financial performance of wholesale and retail sector companies in the context of South Africa. In Sri Lanka, debt financing, in terms of short-term debt has a negative impact on firm performance, while long-term debt has a positive impact. This study gives special focus to identify in which industries do different components of the capital structure have significant impact or weak-to-no impact on firm performances.This suggests for the South African wholesale and retail sector can use equity capital and retained earnings efficiently, thereby minimizing conflicts of agency or agency costs and remaining independent of external financiers. In the case of Sri Lanka, the owners and managers of the retail companies should consider reducing the use of short-term debt and increase long-term debt capital as long-term debt seems to influence their financial performances positively.
Pappu Kumar Dey, Mohammad Nakib, Probal Dutta
Asian Journal of Finance & Accounting, Volume 9; https://doi.org/10.5296/ajfa.v9i2.11736

Abstract:
This study examines the nature and extent of climate change disclosures in the corporate annual reports of the listed companies in Dhaka Stock Exchange, Bangladesh. For this purpose, annual reports related to the year 2014 of the sample 88 listed companies have been scrutinized. In regard to this study, content analysis approach has been conducted considering thirteen different disclosure issues regarding climate change. Our analysis provides the comprehension of below average climate change disclosure practices by the Bangladeshi companies, though 58 percent companies have reported at least one issue on climate change and global warming. ‘Energy saving & efficiency’ and ‘water management & pollution’ are mostly reported issues that are industry specific requirements in some case. From the viewpoint of industry, Banking industry and Cement industry have started to report some issues related to the climate change, where 4 industries out of selected 17 industries have not provided any climate change disclosure. Disseminating climate change disclosure within 10 sentences by most of the reported companies manifests the desideratum of in-depth disclosure practices.
Kennedy Prince Modugu
Asian Journal of Finance & Accounting, Volume 9; https://doi.org/10.5296/ajfa.v9i2.11778

Abstract:
The study investigates the relationship between firm performance (proxied by profitability and liquidity) and corporate disclosure in Nigerian listed firms. The data used in the study were obtained from the annual reports of 60 companies listed on the Nigerian Stock Exchange from the various sectors of the country’s economy. The study covers the post International Financial Reporting Standards (IFRSs) adoption period of three years (2012 – 2014). Corporate disclosure (dependent variable) was disaggregated into mandatory, voluntary and total disclosure. The data were analysed using both descriptive statistics and the Ordinary Least Squares (OLS) regression. Findings from the descriptive statistics reveal that, contrary to prior findings, there is a steady improvement in mandatory disclosure by Nigerian companies since the country’s adoption of IFRSs. However, voluntary disclosure still remains relatively low. The regression results show no significant relationship between profitability and the three components of corporate disclosure. But liquidity shows a significant positive relationship with mandatory and total disclosure. The combined effect of profitability and liquidity shows no significant relationship with any of the components of corporate disclosure. The findings suggest that improved performance of companies does not necessarily induce them to disclosure more information as widely reported by previous researchers. These findings notwithstanding, the decision to disclose sufficiently and timely must be accorded priority attention by companies, considering the critical role of adequate and timely information disclosure in the global marketplace.
Kenneth Enoch Okpala
Asian Journal of Finance & Accounting, Volume 4; https://doi.org/10.5296/ajfa.v4i2.2641

Abstract:
Though small and medium practices (SMPs) which constituted over 70% of auditing firms in Nigeria have been in existence from the inception of accountancy profession but have not been given the required attention. This research paper is exploratory on the ground that SMPs is a new concept. The study investigated the effect of total quality management (TQM) on the performance of the subsector through the use of Six Sigma Methodology (SSM) to improve current business system. The population of the study consists of 884 SMPs in Nigeria. 133 respondents were purposively selected representing a sample fraction of 15%. Questionnaire was administered at random and opinions elicited and analyzed. Pearson Product Moment Correlation Method was used to confirm the hypotheses of the study. Finding obtained revealed that leadership style, management of people and consumers focus are the strongest significant predictors of TQM and operational performance but are lacking in most in SMPs operations. It also discovered that TQM programmes when implemented will influence the quality of auditing services that meets clients’ expectations within the ambit of standards and regulations. The study therefore recommends that SMP should embrace SSM to have significant clients’ relationship, improved performance and maximize institutional prosperity.
Sanjay Sehgal, Srividya Subramaniam
Asian Journal of Finance & Accounting, Volume 4; https://doi.org/10.5296/ajfa.v4i2.2777

Abstract:
This study examines the profitability anomaly for the Indian stock market using data for 493 companies on the BSE from January 1996 to December 2010. A negative relation between profitability and returns is empirically confirmed which is in contrast to prior research for mature markets. Further the observed relationship is robust to choice of profitability measure. The findings can be explained by the fact that more profitable firms tend to give higher dividend payouts and are therefore perceived to be less risky by investors resulting in lower returns. A positive relationship between profitability and payouts and a negative relationship between payouts and beta is obtained confirming our argument. The three factor Fama French model is able to explain returns on profitability sorted portfolios which was not fully explained by CAPM. Thus the profitability anomaly does not pose serious challenge to asset pricing in the Indian context. Our findings have strong implications for academicians as well as portfolio managers. The study contributes to equity market anomaly literature especially for emerging markets.
Muhammad Umar Draz,
Asian Journal of Finance & Accounting, Volume 9; https://doi.org/10.5296/ajfa.v9i2.11578

Abstract:
The relationship between foreign portfolio investment (FPI) and various macroeconomic variables of China has been discussed in the existing literature. However, the link between China’s accounting reforms and FPI is yet to be explored. This study intends to discover the impact of changes in China’s accounting system and convergence of its domestic accounting standards (henceforth referred to as accounting reforms) on FPI. We have used Binary Choice Model in Eviews for two decades’ data. In our analyses, FPI has been taken as dependent variable, whereas accounting reforms, annual increase in listed companies, GDP growth of China and financial crises are taken as explanatory variables. The results of our model reveal a significant relationship between accounting reforms and FPI; moreover, Granger causality test shows a significant causal relationship between yearly increase in listed companies and FPI. Our findings are theoretically rational and can be useful for both investors and the policymakers.
Abdulsalam Saad Alquhaif, Rohaida Abdul Latif,
Asian Journal of Finance & Accounting, Volume 9, pp 48-59; https://doi.org/10.5296/ajfa.v9i2.11752

Abstract:
Gender diversity of boards and reporting of earnings are two most debated issues in the corporate world. In this context, the paper explores how the presence of women directors on the corporate board influence real earnings management through accretive buyback programs. Using a sample of 601 firms’ observations that engage in accretive share buyback from 2010-2015, the findings reveal that existence of women directors on the board is associated with less engagement in accretive share buyback activities. We further find that firms with a higher number of independent directors are less likely to practice real earnings management through accretive buyback programs. Our paper contributes to the debate on gender diversity on boards and its influence on the utilisation of accretive buyback programs as a tool to real earnings management.
Pooja Kumari, Chandra Sekhar Mishra
Asian Journal of Finance & Accounting, Volume 9, pp 28-47; https://doi.org/10.5296/ajfa.v9i2.11492

Abstract:
This paper presents the review of the literature focussed on Ohlson, J.A., 1995. (Earnings, book values and dividends in security valuation. Contemporary Accounting Research 11, 661—687). Firstly an overview then theoretical and empirical research directly related to this work are presented, based on articles cited this work. Further, some bibliometric facts about the study are added. The bibliometric analysis is based on twelve reputed journals of accounting: Journal of Accounting Research, Journal of Accounting and Economics, The Accounting Review, Contemporary Accounting Research, Review of Accounting Studies, Journal of Business Finance and Accounting, Accounting Horizons, The European Accounting Review, Journal of Accounting Auditing and Finance, Accounting and Business Research, A Journal of Accounting, Finance and Business Studies and The International Journal of Accounting. Our findings of bibliometric facts come up with most influenced author, university and country by Ohlson (1995) and followed by keyword analysis.
Asian Journal of Finance & Accounting, Volume 9, pp 375-395; https://doi.org/10.5296/ajfa.v9i1.11212

Abstract:
The goal of this study is to explore the possibility for the Jordanian industrial corporations to apply the International Financial Reporting Standers (IFRS) No. 15 from the point of view of the financial reporting preparers. To achieve the objectives of the study, a questionnaire was designed and distributed to a sample consisting of 84 individuals. Descriptive statistics were used to describe the study sample such as the frequencies, arithmetic mean, and standard deviation. In addition, the one-sample t-test was employed to test the study hypotheses at the 0.05 level of significance. This study showed that it is possible for the Jordanian industrial corporations to commit to the requirements for revenue recognition and the accounting measurement. As well as it is not possible commit to the requirements for the accounting disclosure of the revenues according to the IFRS 15. Furthermore, this study recommended to encouraging the corporations to commit to the requirements for revenue disclosure according to the IFRS 15 in such a way as to reinforce/foster trust of the users of the accounting information in the financial reports.
Srividya Subramaniam, Gagan Sharma, Srishti Sehgal
Asian Journal of Finance & Accounting, Volume 9, pp 1-27; https://doi.org/10.5296/ajfa.v9i2.11456

Abstract:
In this paper, we aim to identify profitable investment styles on the Indian stock market by using various combinations of important stock pricing anomalies consisting of. size, value, volume, profitability, earnings surprises, short term and long term prior returns. Using NSE200 stocks, three different investment styles viz. univariate, independent bivariate and conditional bivariate are constructed for the period July 2005-June 2016.Results show that on an absolute return basis, bivariate strategies do not seem to outperform univariate strategies. The unifactor CAPM is able to absorb 42% of the returns owing to the explanatory power of beta. After adjusting for risk using the three factor Fama and French (1993) model, 42% of the alphas are explained. However, additional risk factors from the Carhart (1997) model and Fama and French (2015) model do not provide any incremental explanatory power over the three factor model, recommending the use of the latter as a baseline to evaluate investment strategies in India. The highest supernormal returns of 1.1% per month are obtained from combining attributes and employing the conditional bivariate investment strategy viz.E2L1 (earnings momentum-Liquidity), M2S1 (price momentum-size), E2M3 (earnings momentum-price momentum). The findings are pertinent to portfolio managers, financial regulators and other stakeholders.
M. S. Nada, Rehab Emad El-Din Mohammed
Asian Journal of Finance & Accounting, Volume 9; https://doi.org/10.5296/ajfa.v9i1.11249

Abstract:
This study aims to examine the evidence for measuring the significance of foreign exchange exposure (FXE) for EGX30 companies during the period from 2000-2016. The problem of the study is concerned with the fluctuations of the foreign exchange (FX) rate in Egypt, which have a great effect on the financial performance of EGX30 companies. Following prior studies (e.g. Aggarwal R., 2010; Lee, 2011 and Sam Agyei-Ampomah K. M., 2012), this study uses Fama-French (FF) model to measure the FXE. The result of the study shows that 70% of EGX30 companies were significant to the foreign exchange exposure; the results are robust to the choice of model design.
Ngoc Kim Pham, Hung Nguyen Duong, Tin Quang Pham, Nga Thi Thuy Ho
Asian Journal of Finance & Accounting, Volume 9, pp 429-447; https://doi.org/10.5296/ajfa.v9i1.10074

Abstract:
Audit quality is considered as an essential factor affecting the reliability of financial information. The aim of this study is to assess the effects of audit firm characteristics, including audit reputation, audit fees and audit firm size, on audit quality. A sample of 192 companies listed on Hanoi and Ho Chi Minh Stock Exchange for the period of 2006-2014 was selected. Multiple regression was used to analyze the data. The findings show that Big 4 auditors in Vietnam provide high audit quality than non-Big 4 auditors. Interestingly, in Vietnam context, except for the audit firms in the Big 4 group, the findings suggest that smaller audit firms provide better audit quality. Additionally, the results reveal that the more audit fees the auditors receive, the lower audit quality they provide. The critical role of audit quality has attracted significantly scholarly attention, however, prior studies have mainly focused on firms in developed countries. Little is known about audit quality in an emerging economy context such as Vietnam. This study adds to the limited number of studies on audit quality of listed companies in emerging economies.
Joshi Prashant Maheshchandra
Asian Journal of Finance & Accounting, Volume 4; https://doi.org/10.5296/ajfa.v4i2.2027

Abstract:
The paper examines the existence of long memory in the Indian stock market using ARFIMA, FIGARCH models. The data set consists of daily return of BSE and NSE stock indices and long memory tests are carried out both for the returns and volatilities of these series. The results of ARFIMA model suggests the absence of long memory in return series of the Indian stock market. The results of FIGARCH model indicate strong evidence of long memory in conditional variance of the stock indices. The long memory property of the BSE market is revealed to be stronger than NSE.
John Francis T Diaz, Martha Christianie Tjokro Hindro
Asian Journal of Finance & Accounting, Volume 9, pp 396-428; https://doi.org/10.5296/ajfa.v9i1.11193

Abstract:
The research studies the relationship between eight firm-specific factors on the profitability of large-, medium-, and small-scale real estate Indonesian companies. The data uses forty-seven real estate companies listed in the Indonesian Stock Exchange from 2010 to 2014. The study utilized multiple linear panel regression models, namely, ordinary least squares (OLS), fixed effects (FE) and random effects (RE) in examining the effect on the return on asset of firm-specific factors, which include: number of days account receivables, number of days inventory, number of days of account payable, size of the company, current ratio, debt ratio, sales growth, and tangibility. Empirical findings show that the number of days account receivable has negative relationship with profitability, but it has no effect on medium-size Indonesian real estate companies. The factor number of days inventories has negative relationship in small-size companies, but the inverse is true for large companies, because large real estate firms have more liquid assets that covers maintenance costs related to real estate inventories. Size and sales growth have positive relationship on profitability for both large and small Indonesian real estate firms. On one hand, current ratio has positive relationship in large companies, while a negative relationship was found in small companies, because of the lower current asset base usually being experienced by smaller real estate firms. Lastly, tangibility has negative relationship with profitability for large companies, while the opposite is true for medium-sized real estate firms. Findings of this research are strong in using two panel regression models, and can help real estate managers have a general perspective regarding determinants of profitability in the expanding Indonesian market. This study also provides fresh perspectives in creating suitable strategies to controlling factors that maximizes profitability.
Asian Journal of Finance & Accounting, Volume 9; https://doi.org/10.5296/ajfa.v9i1.11129

Abstract:
This paper empirically investigates politically connected independent directors in Chinese public firms using 200 state-owned enterprises (SOEs) and 200 non-SOEs from 2002–2014. We find that, in general, firms with politically connected independent directors have higher effective tax rates than firms without such directors. We argue this is because that politically connected independent directors work for the interests of the government and restrict firms’ tax planning activities. Additionally, the effect of politically connected directors on tax rates is weaker in SOEs than in non-SOEs, possibly because of the redundancy of the political ties that both independent directors and ownership bring in SOEs. Our study reveals the potential cost of political connections that prior studies have overlooked.
Tong Trung Tin, John Francis T Diaz
Asian Journal of Finance & Accounting, Volume 9; https://doi.org/10.5296/ajfa.v9i1.11150

Abstract:
This paper investigates the important factors influencing capital structure decisions. The study focuses on the bank leverage of thirty-one Vietnamese commercial banks from 2009 to 2014, because they play a key role as financial catalysts in the growing economy of Vietnam. The analysis employs multiple linear panel regression models, namely, Ordinary Least Squares (OLS), Fixed Effects (FE), and Random Effects (RE). This research examines five bank-specific factors (i.e., size, profitability, growth rate, taxation and business risk), and three financial market and economic variables (i.e., stock market condition, economy, and inflation) influencing capital structure with debt ratio as the dependent variable. Both the OLS and FE models agree that a Vietnamese bank’s size positively affects leverage, which means that the larger the bank, the more debt is incurred. Both models also determine that stock market and economic conditions have negative effects, which implies that in good market conditions, banks lessen their debt loads. In dividing Vietnamese commercial banks into three groups of sizes (i.e., large, medium-sized and small banks) based on chartered capital, both the OLS and RE models agree that size is a positively contributing factor to leverage. However, unlike large Vietnamese banks, medium-sized and small-sized banks tend to still carry a relatively high amount of debt because they are commonly ignored by the equity markets for reasons of illiquidity and instability, pushing them to rely on borrowing funds even to the point of having higher interest rates. Another interesting finding of this paper is that, only small-sized Vietnamese banks’ leverage is negatively affected by stock market and economic conditions. Findings of this paper are robust in using two panel regression models, and can help Vietnamese banks’ managers have a general perspective regarding capital structure determinants. This study also offers insights in creating appropriate strategies to controlling factors affecting banks’ leverage to achieve the target capital structure that minimizes the cost of capital and maximizes profitability.
Asian Journal of Finance & Accounting, Volume 9, pp 310-332; https://doi.org/10.5296/ajfa.v9i1.11073

Abstract:
The global financial crisis and the subsequent Euro-zone crises have resulted in widespread failure of banking systems worldwide. The Indian banking system, which was initially hailed to be unaffected by the crises, was affected indirectly, mainly on account of growing trade and financial integration with the global economy. Although Indian banks were not pushed to the point of insolvency, bank performance benchmarking and evaluation have become important in the dynamic banking environment in India in order to ensure sustained profitability and avoid undue risks.The CAMELS model is one of the most widely-used frameworks for bank performance evaluation (Sahajwala and van der Bergh, 2000). The CAMELS methodology provides a broader view of bank performance than single ratios such as return on equity, particularly as it takes account of both profitability and risk factors in representing bank performance. Several studies have proposed multi-criteria decision models for bank performance measurement (Doumpos and Zopounidis, 2011).The objective of the present study is to integrate multivariate and multi-criteria decision models in bank performance measurement. The study uses the factor structure of the CAMELS model to derive weights for the different criteria in the PROMETHEE methodology. The resulting PROMETHEE scores are used to rank banks under different dimensions, and to compare the performance of public sector and private sector banks in India.
Asian Journal of Finance & Accounting, Volume 9, pp 274-309; https://doi.org/10.5296/ajfa.v9i1.11077

Abstract:
This paper adopts ARIMA model to explore the relationship between business performance and the fluctuation of exchange rate. The empirical results show that the impacts of the fluctuation of foreign exchange rate on the business performance of hotels are significant and different across currencies and the size of a hotel. Furthermore, based on the framework of Kim (2013), a modern portfolio theory proposed by Markowitz (1952) gives an optimal allocation of foreign exchange for a hotel’s decision-makers, who would avoid exchange rate risk exposure and complete the construction of enterprise risk management system (ERM) to reduce losses.
Asian Journal of Finance & Accounting, Volume 9; https://doi.org/10.5296/ajfa.v9i1.11020

Abstract:
This study aims to identify the factors that affect to attract deposits in Palestinian Islamic banks. The researcher used the descriptive approach to reach the results and recommendations of the study. The study society is a branches manager of Islamic banks operating in Palestine. The sample was the Sam of study society; because the small size of study society. It found that there is a relation between the geographical location of the branches of Islamic banks, advertising campaigns and promotion, diversification, development of services, experience of bank staff, and attracting deposits in Islamic banks in Palestine.The study recommended that the Islamic banks in Palestine continuously provide savings campaigns to increase deposits, and must choose locations based on the recommendations of branch managers and the involvement of marketing departments. In addition, they should increase investment in human resources in terms of training, qualification. And work to provide them with the necessary skills to attract customers.
Rozaidy Mahadi, Siti Nabiha Abdul Khalid, Rasid Mail, Raman Noordin
Asian Journal of Finance & Accounting, Volume 9; https://doi.org/10.5296/ajfa.v9i1.10968

Abstract:
This paper analyses the possible contextual and application gaps derived from the utilisation of van Helden and Northcott’s (2010) method of study for classifying themes in published public sector’s accrual accounting papers according to their research objectives. As a result, our theme categorisation refers to the following research objectives: a) proposing new financial/management accounting techniques/approaches for public sector accrual accounting systems (e.g. accrual output-based budgeting, performance management and costing); b) examining the effectiveness of accrual accounting techniques/approaches; c) identifying the conditions for the successful/failure of the implementation of accrual accounting techniques/approaches; and d) knowledge-building in understanding, explaining and critiquing the adoption and use of accrual accounting techniques/approaches, both theoretically and practically. Through the process of populating and establishing the themes (based on research objectives), we were able to identify which areas of study have received less attention and which areas have room for further exploration.
Peterson Owusu Junior,
Asian Journal of Finance & Accounting, Volume 9, pp 224-244; https://doi.org/10.5296/ajfa.v9i1.10913

Abstract:
The four-parameter generalised lambda distribution provides the flexibility required to describe the key moments of any distribution as compared with the normal distribution which characterises the distribution with only two moments. As markets have increasingly become nervous, the inadequacies of the normal distribution in capturing correctly the tail events and describing fully the entire distribution of market returns have been laid bare. The focus of this paper is to compare the generalised method of moments (GMM) and maximum likelihood essential estimates (MLE) methods as subsets of the GLD for a better fit of JSE All Share Index returns data. We have demonstrated that the appropriate method of the GLD to completely describe the measures of central tendency and dispersion by additionally capturing the risk dimensions of skewness and kurtosis of the return distribution is the Generalised Method of Moments (GMM) with the Kolmogorov-Smirnoff Distance good-of-fit statistics and the quantile-quantile graph. These measures are very important to any investor in the equity markets.
Asian Journal of Finance & Accounting, Volume 9; https://doi.org/10.5296/ajfa.v9i1.11003

Abstract:
The performance of manufacturing industry in Iraq has been declining over the last few decades. Worst still, many companies in the manufacturing sector in Iraq are yet to adopt Balanced Scorecard (BSC) to improve their performance despite its potency ensure to achieve competitive advantage and better performance. This study examines the integration between Total Quality Management (TQM) and BSC four perspectives in Iraqi manufacturing industry. Data were collected by means of structured questionnaire survey using simple random sampling and a Partial Least Squares (PLS) algorithm and bootstrap techniques were used to test the hypothesis of the paper. The result revealed that TQM had a significant positive effect on BSC through the measurement of customer perspective, financial perspective, innovation and learning perspective, and internal business process perspective. The finding implies that Iraqi manufacturing industries can attain the performance of their companies in the different perspective of BSC by proper implementation of TQM technique.
, Jannatunnesa Jannatunnesa
Asian Journal of Finance & Accounting, Volume 9; https://doi.org/10.5296/ajfa.v9i1.10871

Abstract:
Dividend policy has been an important component in the arena of financial literature and providing evidence that dividend payout decisions are affected by various factors. Numerous studies have been conducted so far on corporate dividend policy in Bangladesh. The pharmaceuticals and chemicals industries of Bangladesh offer a lot of investment panorama for the retail investors. This research has been an endeavor to determine the factors affecting the dividend policy of these promising industries, and guide the investment decisions of the equity investors. In this attempt, this study is also a unique one to incorporate the chemicals industry along with the pharmaceuticals industry as both the industries constitute the 'pharmaceuticals and chemicals sector' listed in the stock market of Bangladesh. The study is a quantitative one based on secondary data. It comprises of different statistical analyses such as descriptive statistics, correlation matrix and multiple linear regression analysis, etc. Firm size, growth, liquidity, profitability, last year's dividend and P/E ratio are used as dependent variables. Besides, ownership structure, firm age, market share, and risk are used as control variables. The study explores that firm size has significant negative and last year’s dividend has significant positive relationship with dividend payout. However, dividend payout does not depend on firm growth, liquidity, profitability and P/E ratio of a firm. The research outcome may have important implications for the improvement of investors' perceptions, which may assist them in their investment decisions in the researched industries. Certainly more work lies ahead to add to explanations for why some of the factors affect the dividend policy of the industries, while others have no significant impact thereon.
Aree Saeed Mustafa, Ayoib Che-Ahmad, Sitraselvi A/p Chandren
Asian Journal of Finance & Accounting, Volume 9; https://doi.org/10.5296/ajfa.v9i1.10878

Abstract:
This study aims to highlight the importance of protecting investors’ rights, and particularly those of minority shareholders. This study addresses the predominant control-ownership structure of the top 100 firms listed in Bursa Istanbul (BI) using the data for 2015. It shows the most common control-ownership structure within business groups, in which shareholders exercise control over a group of firms and maintain a small stake of firms’ equities. Turkish firms are categorised with highly concentrated ownership and families’ being the dominant shareholders owning more than 80% of all publically listed firms in BI. The study results indicate that the divergence between cash rights and control rights (wedge)in the top 100 Turkish firms is mainly achieved through pyramidal-ownership structure, dual class shares, and cross-ownership at about 41%, 40% and 11%, respectively, while approximately 8% of firms do not use wedge. Hence, wedge exacerbates Type II Agency Problems. This paper calls for future research to study the environment of wedge for Turkish firms listed in BI.
Quan Nhu Tran
Asian Journal of Finance & Accounting, Volume 9, pp 155-165; https://doi.org/10.5296/ajfa.v9i1.10605

Abstract:
The purpose of this paper is to investigate behavioral patterns expressed by investors in the Thailand stock market. The paper examines investment decision-making processes in the context of the current financial market in Thailand to shed some light on behavioral-induced pattern behind such investments. Data for this research was collated from 8 individual investors by semi-structured and in-depth interview. There are four behavioral factors of individual investors in Thailand Stock Exchange: Overconfidence, Excessive Optimism, Psychology of risk, and Herding Behavior. Securities Companies may also use the findings of this research for better understanding on investors’ decision to give better recommendations to them. Stock prices then reflect their true value and Thailand stock market becomes the yardstick of the economy’s wealth and helps enterprises to raise capital for business activities.
Hui-Wen Hsu
Asian Journal of Finance & Accounting, Volume 9; https://doi.org/10.5296/ajfa.v9i1.10763

Abstract:
This project examines whether CEO overconfidence affects firm's fair value reporting. Moreover, prior literature indicates effective corporate governance mechanisms ameliorate the adverse impact of CEO overconfidence. Thus, this paper further investigates whether effective corporate governance will mitigate the association between CEO overconfidence and level 3 fair values. Using a US sample drawn from 2008 to 2011, the results of this paper show that firms with higher CEO overconfidence report more Level 3 fair values and gains from Level 3 fair values. The results also indicates that the positive relationship between higher CEO overconfidence and Level 3 fair values reporting is attenuated for firms with high corporate governance.
Asian Journal of Finance & Accounting, Volume 9, pp 90-104; https://doi.org/10.5296/ajfa.v9i1.10795

Abstract:
The aim of this research is to investigate earnings relative ability, operating cash flow, and two traditional criteria of cash flow, that is, net earnings plus depreciation and operating working capital in predicting operating future cash flows. Further, the effect of firm size on the ability to predict these criteria is investigated in this research. The sample firms contain listed companies in Tehran Stock Exchange (TSE) over the period 2005-2009. The results show that net earnings relative to operating cash flows and its traditional criteria have greater ability to predict future cash flows in small firms whereas operating cash flows compared with other criteria are better predictors in big firms. Results indicate thatthe predictability of all models increases considerably when firm size increases.
Marco Mele
Asian Journal of Finance & Accounting, Volume 9, pp 105-115; https://doi.org/10.5296/ajfa.v9i1.10343

Abstract:
Foreign exchange market has been subject of studies and discussions for many years. They were created modern theories and models to understand and predict the evolution of the price of money, and embarked on new discussions and new frontiers of study.In this paper we test the hypothesis of non-linearity and behavior chaotic the latest developments of the markets, to arrive at a solid and unambiguous conclusion on this type of dynamic systems analyzed. In particular, we introduce mathematical concepts and to study the properties of chaotic dynamics and non-linear in nature. It will delve into topics not therefore always present in economics courses in order to base the tests carried out on solid considerations from the point of view of formal mathematical. It will be followed, finally, a scientific rigor during the course of the analysis in order to give an interpretation of the results of logistic type can lead to scientific considerations different from econometric modeling.
Farzana Huda,
Asian Journal of Finance & Accounting, Volume 9; https://doi.org/10.5296/ajfa.v9i1.10712

Abstract:
In Bangladesh the establishment of merchant bank added value to the stock market which plays a vital role in the progress of economic development. This study tried to analyze the performance of Lanka Bangla Investment Ltd., Prime Finance Capital Management Ltd., IDLC Investment Ltd. and Uttara Finance and Investment Ltd. Seven trend equations have been tested for different activities of the selected merchant banks. It is observed that the selected merchant banks were able to achieve a stable growth of investment in securities, margin loan to clients, brokerage commission, capital gain/loss from securities, portfolio management services, issue management fees, corporate advisory fees and underwriting commission during the period of 2011-2015. Among them the trend equation of investment in securities, margin loan to clients, and corporate advisory fees are positive incase of all the selected merchant banks. Square of correlation coefficient (r2) has also been tested for all trend equations. The r2 of interest income from merchant bank, portfolio management services, settlement and transaction fees and documentation fees, is more than 0.5. It indicates the prospect of merchant banks in Bangladesh is bright.
Yaying Mary Chou Yeh, Wen-Chi Hsieh
Asian Journal of Finance & Accounting, Volume 9, pp 68-89; https://doi.org/10.5296/ajfa.v9i1.10322

Abstract:
This study uses Taiwanese public firms as a sample to examine if board supervisory quality enhances CSP. The present study uses four proxies for supervisory quality of board at group level: board meeting attendance rate, number of board meetings, social capital of the board and average training hours of directors. We obtain 348 CSR data from an international CSR rating agent and match them with double size non-CSR firms. We find that CSR firms exhibit significantly higher board attendance rate, board meeting frequency and board social capital than non-CSR firms. For CSR firms, board attendance rate and board meeting frequency positively impact CSR ratings, implying that board diligence is essential to monitoring management to achieve higher social objectives. However, board social capital and training significantly but negatively impact CSP, implying busy board and inexperienced board detriments CSP.Board success in CSR means directors must be passionate about the issues on CSR. Additionally, firms that are behind social agenda need to recruit resourceful directors to diversify information base for advises about stakeholder issues and trends. Firms that have taken steps in CSR activities should not recruit overly busy directors or inexperienced directors. Our paper provides both theoretical and practical implications.
Nazish Bibi, Shehla Amjad
Asian Journal of Finance & Accounting, Volume 9; https://doi.org/10.5296/ajfa.v9i1.10600

Abstract:
The purpose of this paper is to investigate the relationship between firm’s liquidity and profitability; and to find out the effects of different components of liquidity on firms’ profitability.The relationship between liquidity and firms’ profitability is empirically examined by collecting the data of 50 listed firms of Karachi Stock Exchange, Pakistan. Panel data has been collected from secondary sources for the year 2007 to 2011 .Net operating income and Return on assets are used measure of firm’s profitability. Liquidity of the firm is measured by using cash gap in days and current ratio. Firm size measured by net sales, total assets and market capitalization .The study applies regression analysis to determine factors affecting profitability. Incremental tests are carried out to see the importance of individual variables in the model.The results of correlation and regression analysis showed that there is a significant negative relationship between cash gap and return on assets while current ratio has significant positive relationship with profitability. Results further indicate that log of sales and log of total assets has positive significant relationship with profitability. The findings of this study are based on firms listed on the Karachi Stock Exchange (KSE). Hence, the results cannot be generalizable to those firms which are not listed on Karachi stock exchange. The sample of the study comprises only the merchandising and manufacturing firms. Banks are excluded due to their nature of work.
Asian Journal of Finance & Accounting, Volume 8; https://doi.org/10.5296/ajfa.v8i2.10288

Abstract:
Selecting the best integration approach is a meticulous and sensitive process that can mold the completion of the merger and/or acquisition transaction. In this paper, I discuss that implementing the proper integration approach leads to mitigating or increasing impending risks when going into major company restructuring events. If proper selection and execution takes place, and all related processes and expectations of the parties involved are duly taken into account, successful post-merger integration can be concluded in the Republic of Macedonia in spite of numerous difficulties. One of the greatest risk factors certainly lies in the satisfaction or dissatisfaction of the work force which is of vital meaning for the operational excellence of every entity. Three different integration approaches - absorption, symbiosis, and preservation - are observed through literature overview and particular transactions. Additionally, I study the example of the integration approach adopted by one. Vip doo Skopje following the merger of Vip operator dooel Skopje and ONE in 2015, accentuating that multiple factors can increase or deteriorate the chances of integration success.
Asian Journal of Finance & Accounting, Volume 9, pp 35-53; https://doi.org/10.5296/ajfa.v9i1.10372

Abstract:
The purpose of this study is to examine the effect of enterprise risk management (ERM) and credit risk management (CMR) on Indonesian bank performance. This study also investigates the moderating role of bank contingency factors on those impacts. By exploring purposive sampling method, 24 Indonesian public listed Banks were selected as the sample of this study for four years observations.This study found ERM and CRM positively influence on Indonesian bank performance. This study also reported that the influencing of ERM on Bank performance will be stronger for large bank and the bank which operate in higher environmental uncertainty, higher complexity, and lower independent board monitoring. In contrast this study provide an empirical evidence on strangtern CRM-bank performance relationship will be exist for small bank and the bank which operate in lower environmental uncertainty, lower complexity, and higher independent board monitoring.
Aws Yousef Shambor
Asian Journal of Finance & Accounting, Volume 9, pp 1-34; https://doi.org/10.5296/ajfa.v9i1.9359

Abstract:
This study investigates the capital structure determinants of 346 oil and gas firms that are the constituents of the Global Oil and Gas Index (OILGSWD) over the period of 2000 – 2015, taking into account the effect of the Global Financial Crisis of2007-2009 on the determinants of the capital structure. Thus, six firm level explanatory variables (namely: liquidity, profitability, growth, non-debt tax shield, tangibility and size) are selected and regressed against the appropriate capital structure measure, leverage, the ratio of total debt to book value of total assets. The data is collected from secondary sources depending on the data from the DataStream database. The major findings of the study indicate that tangibility, profitability, size, liquidity and non-debt tax shield are the significant determinants of capital structure of oil and gas firms, while growth is considered insignificant. The capital structure is analyzed in terms of the three main theories of capital structure: Trade-off theory, Pecking order theory, and Agency cost theory. Finally, the global financial crisis has to some extent a significant impact on the capital structure determinants of oil and gas firms and has no significant impact on liquidity, as indicated by the OLS regression analysis results.
Ku-Jun Lin, Hai-Ming Chen, , Wen-Chen Lo
Asian Journal of Finance & Accounting, Volume 8; https://doi.org/10.5296/ajfa.v8i2.10383

Abstract:
The purpose of this study is to explore the influences of second generation National Health Insurance (NHI) on the stock prices of listed companies in Taiwan. We employed the Event Study methodology to analyze the impact on listed companies’ stock prices during the period of NHI Act amendment. Moreover, with a seemingly unrelated regression model, we discovered whether or not the new National Health Insurance system exerts different influences on different industries.The main results are as follows. First, the second generation NHI affects the stock prices of listed companies during the NHI act revision period. Secondly, the second generation NHI has different influences on industries. One possible reason is that the second generation NHI’s charges of supplementary premium on dividend income makes investors feel pessimistic about this new insurance policy. This issue alters investment decisions and has a negative influence on Building Material and Construction Industry.
Asian Journal of Finance & Accounting, Volume 8, pp 194-204; https://doi.org/10.5296/ajfa.v8i2.10274

Abstract:
This study examines the determinants of profitability in the Ghanaian Banking Industry for an eight (8) year period of 2007 to 2014. Using a sample from 9 local banks and 12 foreign banks in Ghana, the study combines bank-specific determinants and macroeconomic variables to access bank profitability with Return on Assets (ROA) as the dependent variable. The Hausman specification test was performed on a panel regression to determine the appropriate model for this study. The estimation results shows that, bank SIZE and DEPOSITS are not significant and does not impact profitability. However, LOANS, CAPITAL and OVERHEADS were found to be significant and impacts on profitability. The study concludes that banks in Ghana should be technological in their operations to reduce staff cost since the OVERHEAD was highly significant and impacts negatively on ROA.
Asian Journal of Finance & Accounting, Volume 8; https://doi.org/10.5296/ajfa.v8i2.9721

Abstract:
Life insurance policies are no longer seen solely as a means of insuring life. Due to many new features introduced by life insurers, they are seen in the new light of serving savings and even investment purposes besides the basic purpose of insuring life. The present study discusses the rates of return given by different types of policies, and the effect of mortality on these rates of return across age, sum assured, and maturity period in each type of policy studied.The findings indicate that different types of policies give different rates of return and that mortality does have an effect on the rates of return. Endowment plans have higher rate of return with mortality incorporated, while for unit-linked investment plans, the rate of return is higher when it is treated purely as an investment instrument. The study also revealed that the unadjusted and mortality-adjusted rates of return follow a linear relationship that is very similar to the capital asset pricing model. The study opens a further scope of research by extending the methodology to include other relevant risk factors besides mortality, and for different types of policies across companies.
Asian Journal of Finance & Accounting, Volume 8, pp 95-112; https://doi.org/10.5296/ajfa.v8i2.10095

Abstract:
Literature on the effect of directors’ and officers’ insurance (D&O insurance) on managers’ decision-making supports the contention that D&O insurance encourages managers to engage in opportunistic behaviors that benefit themselves at the expense of shareholders. Managerial myopia is an essential agency issue. The literature suggests that myopic managers have incentives to reduce R&D spending to boost current earnings in order to increase their private benefits. This study examines whether D&O insurance induces myopic R&D cuts. Using a sample of Taiwanese listed firms, the results show that firms with higher levels of D&O insurance coverage are more likely to cut R&D expenditures to avoid earnings declines. This study provide insight into how the incentives arising from D&O insurance play an essential role in determining managerial myopic behavior.
Amal Peter Abeysekera,
Asian Journal of Finance & Accounting, Volume 8, pp 113-124; https://doi.org/10.5296/ajfa.v8i2.10056

Abstract:
This paper aims to identify how the inclusion of financial sector affects the ability of asset pricing models to explain the average stock returns in the CSE. Most of the asset pricing researches, the firms in the financial sector are excluded on the basis that their characteristics and the leverage are notably different than firms in other industries. Therefore the objective of this study is to identify the impact of the inclusion of financial sector on the ability of the Carhart four-factor model to explain the average stock returns in the CSE and to compare its performance with the Capital Asset Pricing Model (CAPM) and the Fama and French three-factor model. The study finds that the four-factor model; incorporating the market premium, size premium, value premium and momentum premium provides a satisfactory explanation of the variation in the cross-section of average stock returns in the CSE, even when the financial sector is included. It is found that the Carhart four-factor model performs better than the CAPM in all scenarios; and that it performs notably better than the Fama and French three-factor model.However, there is no notable difference in the findings either the financial sector is included or not.
Seoungpil Ahn,
Asian Journal of Finance & Accounting, Volume 8, pp 125-134; https://doi.org/10.5296/ajfa.v8i2.10186

Abstract:
Equity private placement is the newest method of corporate financing strategy. The private equity financing under SEC Rule 144A is exploding and yet not much is known about the motivation behind private equity placement by public firms. Considering that privately placed firms have no bonding benefit, private equity investors would discount their capital by the amount of expected consumption of private benefits. Therefore, the issuers are unable to lower the cost of capital nor increase managerial perquisites. One possible motivation for private placement then is that firms offering the private DR increase their private benefits with the capital raised subsequently. Our approach is new to literature by incorporating both benefit (conceal private information) and cost (informational monopoly) associated with private equity financing.
Asian Journal of Finance & Accounting, Volume 8, pp 171-193; https://doi.org/10.5296/ajfa.v8i2.10198

Abstract:
The study objects for determining whether the listed firms in Abu Dhabi Securities Exchange exercise the phenomenon of earnings management in its financial reporting, and whether these practices are affected or driven by the capital structure of firms. To achieve the objectives of the study, a sample consisting of 29 listed firms at Abu Dhabi Securities Exchange (ADX) out of total 83 listed firms, had been selected using the simple random sampling method. Data covering 4-years was collected from the included firms in the sample, starting from 2012 till the end of 2015. The binomial distribution test is used to determine whether listed firms at ADX exercise the phenomenon of earnings management using the modified Jones 1995 model, whereas, the simple linear regression method is used to test whether the proportion of financial leverage in the capital structure of firms drives the practices of earnings management. The study shows that the firms exercise the phenomenon of earnings management, and the regression outputs show a significant positive effect of financial leverage on the practices of earnings management phenomenon.
, Olayemi Deborah Oluwasesin
Asian Journal of Finance & Accounting, Volume 8, pp 155-170; https://doi.org/10.5296/ajfa.v8i2.10197

Abstract:
The study examined the effect of human capital on the profitability of quoted manufacturing companies in Nigeria. The study aimed at determining if expenditure on human has influence on the profitability of listed manufacturing companies on the Nigeria Stock Exchange. A sample of 10 listed manufacturing companies on the Nigeria Stock Exchange was used for the study. This study used data mainly from secondary sources and the analysis of data collected was done using descriptive and inferential statistics. The descriptive statistics include mean, standard deviation, kurtosis, skewness while inferential statistics that was used in testing the hypotheses include panel regression and correlation. The study revealed that all the explanatory variables have positive relationship with profitability, however, expenditure on health contributed more to the profitability of the firms with a beta value of 27.8609 than expenditures on salaries and wages, training and contributory pension with beta values of 0.3107, 2.6752 and 3.4519 respectively. The study also found that that only expenditure on health can significantly predict net profit at 5% level of significance. The study concluded that human capital expenditure significantly influenced profitability of manufacturing companies quoted on the Nigerian Stock Exchange and companies that place more emphasis on human capital, maintaining it and treating it as a pure asset will have motivated work force.
Ahmed Zemzem,
Asian Journal of Finance & Accounting, Volume 8, pp 195-211; https://doi.org/10.5296/ajfa.v8i1.9297

Abstract:
The aim of our research is to investigate whether good governance is associated with higher credit rating in Japanese firms. Mainly, this research seeks for the examination of the effect of governance attributes namely those related to the board and ownership structure also quality of information on credit ratings. Empirical analyses are conducted from a sample of 75 Japanese firms listed on Topix 100, over the period 2006- 2013 using Ordered Probit regression. The study shows that good governance is associated with higher credit rating and suggests that active monitoring by independent directors and better disclosure mitigate agency conflicts and protect the interests of debtholders.
, Sin-Hui Yen, Wei-Hung Lai
Asian Journal of Finance & Accounting, Volume 8, pp 135-154; https://doi.org/10.5296/ajfa.v8i2.9917

Abstract:
This study explores the influence of problem-based learning (PBL) on the learning outcomes of accounting students. The participants in this study were sophomore accounting students enrolled in an intermediate accounting course. We adopted a pre-test/post-test design in conjunction with a questionnaire survey. Our results show that the learning outcomes of students in the PBL accounting course (experimental group) were superior to those in the control group. Further analysis revealed that male students improved more than female students, and that the improvements of the male students who had passed the preliminary accounting exam were more pronounced than those who had not passed. In the after-class survey, students in the experimental group reported that PBL encouraged self-direct learning, and promoted their ability to think and learn independently. This study adds to the empirical literature related to the application of PBL in accounting education and presents five suggestions to facilitate further research in such applications.
Asian Journal of Finance & Accounting, Volume 4; https://doi.org/10.5296/ajfa.v4i2.1764

Abstract:
This paper investigates the factors behind long-term convergence in the insurance sector by questioning the role of harmonization and regulation across the EMU. By investigating convergence through balance-sheet items, the study sheds light on the role played by the management preferences of insurances across the EMU. Overall, the convergence tests employed within this study provide evidence of limited convergence within the insurance sector across the EMU countries.
, Melati B. Ahmad Anuar, Nik Intan Norhan Adb Hamid
Asian Journal of Finance & Accounting, Volume 4; https://doi.org/10.5296/ajfa.v4i2.1786

Abstract:
The impact of corporate diversification on financial performance has been subject of some studies from the past. In addition, scholars found positive or negative relationship between the two variables. However, there are some theories and motivation which explain the part of relationship that state in this paper. In this paper, we try to show measurement of diversification and summary of related studies.
Namita Rajput, , Ajay Rajput
Asian Journal of Finance & Accounting, Volume 4; https://doi.org/10.5296/ajfa.v4i2.1874

Abstract:
In this paper we examine the information spillover and volatility spill-over relationship for Indian stock market. We cover data during 1992-2011. We examine if there has been an increase in volatility persistence in the Indian stock market on after the process of financial liberalization initiated in India. Further, we examine the shifts in stock price volatility and the nature of events that apparently cause the shifts in volatility. We examine if there has been an increase in volatility persistence in the Indian stock market on after the process of financial liberalization initiated in India. This paper explores to develop alternative models from cointegration, VECM, Variance De-composition Analysis, Granger causality, Block Exogeneity wald test, Impulse Response Analysis and alternative forms of the Autoregressive Conditional Heteroscedasticity (ARCH) or its generalisation, the Generalised ARCH (GARCH) family, to estimate volatility in the Indian equity market return. Bidirectional informational spillover is confirmed. The bidirectional volatility spill-over, persistence and clustering is also confirmed in the sample series. Our findings have implications for policy makers, hedgers and investors. The research contributes to present investment literature for emerging markets such as India.
Naveen Kumar, J. P. Singh
Asian Journal of Finance & Accounting, Volume 4; https://doi.org/10.5296/ajfa.v4i2.1737

Abstract:
The current study examines the efficacy of outside directors on the corporate boards of 157 non-financial Indian companies for the year 2008. The research particularly investigates if the monitoring by grey director (non-executive non-independent) and independent director influences firm performance. Research finding reveals that while the proportion of grey directors on board has marginally deteriorated effect, the independent director’s proportion has an insignificant positive effect on firm value. Outcome of research has significant implications for devising a board model for companies in India that have a significant ownership concentration and insider control. Independent directors require greater representation on the board in lieu of other non-executive outside directors.
, Seyed Vali Mostafavi Makrani
Asian Journal of Finance & Accounting, Volume 8; https://doi.org/10.5296/ajfa.v8i2.9632

Abstract:
The construction of one or more plants in optimum sites and in the best possible situation, not only improves materials circulation and customer services, but also puts the company in a desirable situation. Decisions associated with the selection and acquisition of features of a center’s site selection can have a great impact on the ability to gain and maintain competitive advantages. This study tests the impact of distance from population centers on the profitability for the first time. The sample which has been used in the food products industry, includes 21 firms listed in Tehran Stock Exchange during 2009 to 2014, and panel data regression methods were used to process and test the hypotheses. The results showed that product market competition enhances the negative impact of corporate distance from Tehran and big cities on the basic earnings power (earnings before tax). However, the relative power of the firm in a competitive environment weakens the negative impact of corporate distance from Tehran and big cities on the basic earnings power (earnings before tax).
Imad Zeyad Ramadan
Asian Journal of Finance & Accounting, Volume 8, pp 60-69; https://doi.org/10.5296/ajfa.v8i2.8616

Abstract:
This study aimed to test the effect of macroeconomic factors on the movements of stock prices of Jordanian industrial companies listed in Amman Stock Exchange (ASE) in order to provide empirical evidence about the determinants of the movements of stock prices. To achieve this objective, all the 77 Jordanian industrial firms listed at ASE for fifteen years from 2000 to 2014 have been selected, resulting in 1054 firm-year observations. The unbalanced pooled cross-sectional time series multiple least square regression method has been used to present data analysis. while the experiential results showed significant negative effect of two of the macroeconomic factors, namely, interest and inflation rates, on the movements of the Jordanian industrial companies stock prices, results found that the effect of money supply and GDP on the movements of stock prices were significantly positive. These results are consistent with (Mukherjee and Naka, 1995, Zhao, 1999 & Udegbunam and Eriki, 2001, Al-Qenae, Li & Wearing, 2002, Dimitrios Tsoukalas, 2003 , Ibrahim 2003; Chaudhuri and Smiles, 2004)
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