Journal of Governance and Regulation

Journal Information
ISSN / EISSN : 2220-9352 / 2306-6784
Published by: Virtus Interpress (10.22495)
Total articles ≅ 524
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Latest articles in this journal

Noor Arifin,
Journal of Governance and Regulation, Volume 10, pp 156-163; https://doi.org/10.22495/jgrv10i4art14

Abstract:
Islamic philanthropy or zakat has a mission to poverty alleviation and improve welfare for zakat recipients (Fitri, 2017), especially for the poor and affected by natural disasters. This study aims to determine the distribution model and use of productive zakat and to determine the effectiveness of productive zakat in improving welfare after natural disasters in Indonesia. This study uses qualitative methods with the theoretical development of field research. Data collection was carried out through interviews and in-depth observations from national zakat management organizations in Indonesia, including The National Board of Zakat of Republic Indonesia (BAZNAS), The Department of Amil Zakat, Infaq and Alms of Nahdlatul Ulama (NU-Care LAZISNU) The Department of Amil Zakat, Infaq and Alms Muhammadiyah (LAZISMU), as well as communities receiving productive zakat programs. The results of this study indicate that the model of productive zakat distribution by zakat institutions in Indonesia uses two approaches, namely through direct business capital assistance and through proposals addressed to victims of natural disasters. They use zakat for starting businesses or developing businesses that are already owned by the recipient of productive zakat funds. In sum, productive zakat helps the economy of people who receive productive zakat recipients but it is still not effective for their welfare. Therefore, to increase the maximum role of zakat institutions in distributing productive zakat, synergies are needed between zakat institutions, partners (universities, volunteers, business consultants, etc.), and Islamic insurance.
Mahmoud A. Odat, Khaldoon Ahmad Al Daoud, Ziad Mohammad Zurigat
Journal of Governance and Regulation, Volume 10, pp 144-155; https://doi.org/10.22495/jgrv10i4art13

Abstract:
This study examines the impact of corporate governance mechanisms on a firm’s cost of equity. The corporate governance mechanisms examined consist of board size, board independence, CEO duality, multiple directorships held by board members, and board political influence. To accomplish the study objective, 210 firm-year observations for manufacturing companies listed on Amman Stock Exchange (ASE) in the period 2014–2018 are analyzed using panel data analysis techniques. The results of the fixed effects regression model reveal that CEO duality and board political influence negatively affect the cost of equity, while there is no significant effect of board size, board independence, and multiple directorships on the cost of equity. The results suggest that firms’ board of directors is an important factor in mitigating the agency problem suggested by Jensen and Meckling (1976). They also suggest that information risk is priced, which is consistent with previous research such as Easley, Hvidkjaer, and O’Hara (2002), and that the board of directors plays a role in reducing that risk in capital markets.
Amneh Hamad, Tariq Alzoubi, Majd Iskandrani, Ali Alhadidi
Journal of Governance and Regulation, Volume 10, pp 137-143; https://doi.org/10.22495/jgrv10i4art12

Abstract:
This research aims to gauge the effect of cash holdings on Jordanian companies’ value and to detect whether there is a non-linear association between them. By conducting a multivariate regression on 86 non-financial companies listed on Amman Stock Exchange (ASE) during the period from 2006 to 2017. The results of the research reveal that there is a significantly positive association between cash holdings and firm value. The study also shows the positive impacts of financial leverage and revenues growth on firm value, while the results show that a size of a company has a negative effect on a value of a company. Moreover, the study notices that there is no optimal level to reserve some cash in order to increase firm value in Jordan. The methodology of the study depends on the work of Martínez-Sola, García-Teruel, and Martínez-Solano (2013) and Nguyen, Nguyen, and Le (2016). This research documents a substantial contribution to the existing research works that investigate the association between cash holdings and firm value in an emerging market like Jordan. Moreover, the findings are recognized to be an interest to policymakers, scholars, and potential investors.
Bedri Hamza, Petraq Milo
Journal of Governance and Regulation, Volume 10, pp 130-136; https://doi.org/10.22495/jgrv10i4art11

Abstract:
The main purpose of this study is to analyze the effects of fiscal policy on economic growth in the Republic of Kosovo for the time period from January 2006 to September 2018 in terms of their long-term and short-term relationships. The methods used are measured using the second data (monthly series) provided by the Department of Finance as the appropriate national institution. Kosovo as one of the Balkan countries is facing the same problems as other labor countries. This study will contribute greatly to analyzing the impact of fiscal policy and will help policymakers come up with good decision-making. The econometric vector autoregression (VAR) model used in this study uses total public expenditure, total public income, fixed income structure, and consumer price index as independent variables and gross domestic product (GDP) as a dependent variable. In addition, in order of consistency time-series data were evaluated by the augmented Dickey-Fuller unit root test. The study concludes that total public expenditure significantly affects GDP; on the other hand, the total public income has a positive but visible impact on GDP, which means that the impact of government investment is more pronounced on financial development compared to public revenue; and increased demand for co-operation has decreased in monetary terms (World Bank, 2021). It is possible that government spending and structure may be related to key development quality ideas, such as the segregation of wages and environmental support (Halkos & Paizanos, 2015).
Hassan M. Hafez
Journal of Governance and Regulation, Volume 10, pp 113-129; https://doi.org/10.22495/jgrv10i4art10

Abstract:
Egyptian investors have lost a large portion of their investment due to the coronavirus pandemic. This research is novel research that aims to identify the behavioral factors of Egyptian investors that affect their investment decisions, before and after the pandemic. A number of survey questionnaires were distributed to Egyptian investors, in addition to personal interviews. Descriptive statistics and a regression model were used to analyzing the impact of psychological factors on the investment decisions for Egyptian investors. Results revealed that demographic and psychological factors influence investment decisions: overconfidence, loss, and regret aversion, disposition effect, representativeness and herding behavior, but it is not affected by gambler’s fallacy. It is affected also by some other demographic variables. However, income level has no effect. After the pandemic, not all demographic and psychological factors affect Egyptian investor’s behaviour. The behaviour finance theory is valid only and applied before the pandemic. This research opens the door for a new dimension to studying how to work on the governance of investors’ decisions, rationalizing those decisions and their effectiveness, which ultimately contributes to achieving high returns on their investment portfolios.
Anthony O. Nwafor
Journal of Governance and Regulation, Volume 10, pp 104-112; https://doi.org/10.22495/jgrv10i4art9

Abstract:
As governments in different parts of the world seek solutions to the public health emergency created by the COVID-19 pandemic and the impacts on corporate enterprises, different steering committees are constituted to implement measures aimed at containing the spread of the disease. Information that has the potential to impact materially on companies’ securities when made public is shared among committee members in the course of their deliberations. That realization informs the purpose of this paper which is to explore through doctrinal research method the law on insider trading in South Africa in such a manner as would reaffirm the position of the law on insider, inside information, and the prohibited conducts. The findings indicate a propensity by those entrusted with business information to leverage such information for personal benefits which creates a problem of uncertainties on the integrity of the securities market. The paper concludes by advocating the application of the law in such a manner as would ensure that the conduct of persons entrusted with inside information is guided by the legal threshold on insider trading.
Ali A. Alnodel, Toseef Azid
Journal of Governance and Regulation, Volume 10, pp 93-103; https://doi.org/10.22495/jgrv10i4art8

Abstract:
This paper aims to investigate the board of directors’ (BD) effectiveness in enhancing compliance with regulations in the Saudi context. In particular, it explores whether there is an impact of the board of directors (size, independence, frequency of meeting and CEO serving on board) on the value of fines imposed by the Saudi Capital Market Authority (CMA) during the period from 2010 to 2017. In total 728 year observations were collected and analyzed. Multiple linear regression is performed to examine the association between the value of fines imposed by CMA and companies’ board of directors attributes. The results show that the CEO is serving on board, and ownership concentration significantly impacts the value of the fines imposed by the CMA. These results suggest that power distance could influence the function and effectiveness of the board of directors in compliance with official regulations. This paper provides implications to regulators interested in fostering compliance with regulations in emerging capital markets. The findings can also help investors to enhance their corporate governance practices.
, Rahmawati Rahmawati, Bandi Bandi,
Journal of Governance and Regulation, Volume 10, pp 84-92; https://doi.org/10.22495/jgrv10i4art7

Abstract:
The family firm literature has found that 73% of empirical studies focus on American and European family firms (De Massis, Sharma, Chua, & Chrisman, 2012). De Massis et al. (2012) propose investigating family firms with contextual nuances of family firms in under-represented areas such as Asia. In addition, study on family firms related to tax aggressiveness activities is limited and the mixed results. Therefore, this study aims to explain the effect of family ownership on corporate tax aggressiveness. This study also investigates whether independent commissioners influence the practice of tax aggressiveness by family firms. The study observed 220 manufacturing companies listed on the Indonesia Stock Exchange (IDX) from 2011 to 2015. We found that family ownership has a negative effect on tax aggressiveness. We also found that independent commissioners reinforce the negative influence of family ownership with tax aggressiveness. Our study contributes to the family firm literature in developing countries, particularly in terms of tax aggressiveness. We also provide practical implications for management to consider independent commissioners to provide adequate supervisors and advisors regarding family firm tax strategies.
Njomëza Zejnullahu
Journal of Governance and Regulation, Volume 10, pp 70-83; https://doi.org/10.22495/jgrv10i4art6

Abstract:
The presence of principal-agent problems in publicly owned enterprises is highlighted by many scholars. Unfortunately, such problems are present in publicly owned enterprises (POEs) in Kosovo too. Capture, rent-seeking, moral hazard, information asymmetry, and adverse selection are some of the agency problems that POEs in Kosovo are facing, negatively impacting their performance and citizens’ welfare. Recently, one of the POEs that used to be the most profitable is on the verge of bankruptcy with bank accounts blocked. This paper aims to explore the relevance of principal-agent problems in the governance of publicly owned enterprises and the failure of the shareholder to play its role and pursue the best interest of POEs. The paper also questions the applicability of the principal-agent model in POEs when the shareholder fails to play its role as a principal by concluding that the lack of “real” principal in publicly owned enterprises undermines the applicability of principal-agent theory and there is a need to make the Government more responsible by taking some measures such as the inclusion of private sector as a shareholder. The paper concludes that the Government must act as a responsible shareholder and exercise its role properly while also raises the opportunity of the inclusion of the private sector as minority shareholders in POEs, which may help in increasing the responsibility of the shareholder in the oversight of the management of POEs. Conclusions of the paper may be relevant for further studies regarding the corporate governance and structure of publicly owned enterprises from the perspective of the agency theory and hence exploring possibilities of reducing principal-agent problems in POEs.
Muzi Khumalo,
Journal of Governance and Regulation, Volume 10, pp 59-69; https://doi.org/10.22495/jgrv10i4art5

Abstract:
South African state-owned enterprises (SOEs) form a critical cog in the state machinery. The significance of sound corporate governance has become more pronounced as citizens demand more accountability and value in the use of public resources (Vicente, 2020). The paper utilised a qualitative desktop approach, a case study design and thematic analysis to investigate board and executive management practices in the North West Development Corporation (NWDC) corporate governance, factors hindering good corporate governance and lastly recommendations that can be offered to enhance good corporate governance. The NWDC is a regional development finance institution in South Africa, which over the years has continued to implement adverse audit outcomes (AGSA, 2019b). The thematic analysis findings revealed a direct relationship between lack of consequence management and the state of poor corporate governance in the NWDC. The lack of ethical leadership lies at the heart of this morass of SOEs in general. The study, therefore, recommends the full implementation of the existing legislative framework, the Codes on Good Governance and the anti-corruption national strategy in order to inculcate accountability in the South African public agencies that include the NWDC. The paper is relevant in addressing the Auditor-General qualified audits, which underlines the ineffectiveness of the existing SOE governance system by not inherently correlating corporate success with the presence of deeper corporate governance standards and ethical behaviour.
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