Search results for: financial risks

Authors: Sayed Amir Hamzeh Mirkheshti

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Offshore wind energy as a strategic renewable energy, has been growing rapidly due to availability, abundance and clean nature of it. On the other hand, budget of this project is incredibly higher in comparison with other renewable energies and it takes more duration. Accordingly, precise estimation of time and cost is needed in order to promote awareness in the developers and society and to convince them to develop this kind of energy despite its difficulties. Occurrence risks during on project would cause its duration and cost constantly changed. Therefore, to develop offshore wind power, it is critical to consider all potential risks which impacted project and to simulate their impact. Hence, knowing about these risks could be useful for the selection of most influencing strategies such as avoidance, transition, and act in order to decrease their probability and impact. This paper presents an evaluation of the feasibility of 500 MV offshore wind project in the Persian Gulf and compares its situation with uncertainty resources and risk. The purpose of this study is to evaluate time and cost of offshore wind project under risk circumstances and uncertain resources by using Monte Carlo simulation. We analyzed each risk and activity along with their distribution function and their effect on the project.

Keywords: wind energy project, uncertain resources, risks, Monte Carlo simulation

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Authors: Natalia Feruleva

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The goal of this paper is to develop the fraud risk assessment model basing on both relational and financial data and test the impact of the relationships between Russian non-public companies on the likelihood of financial fraud commitment. Relationships mean various linkages between companies such as parent-subsidiary relationship and person-related relationships. These linkages may provide additional opportunities for committing fraud. Person-related relationships appear when firms share a director, or the director owns another firm. The number of companies belongs to CEO and managed by CEO, the number of subsidiaries was calculated to measure the relationships. Moreover, the dummy variable describing the existence of parent company was also included in model. Control variables such as financial leverage and return on assets were also implemented because they describe the motivating factors of fraud. To check the hypotheses about the influence of the chosen parameters on the likelihood of financial fraud, information about person-related relationships between companies, existence of parent company and subsidiaries, profitability and the level of debt was collected. The resulting sample consists of 160 Russian non-public firms. The sample includes 80 fraudsters and 80 non-fraudsters operating in 2006-2017. The dependent variable is dichotomous, and it takes the value 1 if the firm is engaged in financial crime, otherwise 0. Employing probit model, it was revealed that the number of companies which belong to CEO of the firm or managed by CEO has significant impact on the likelihood of financial fraud. The results obtained indicate that the more companies are affiliated with the CEO, the higher the likelihood that the company will be involved in financial crime. The forecast accuracy of the model is about is 80%. Thus, the model basing on both relational and financial data gives high level of forecast accuracy.

Keywords: financial fraud, fraud prediction, non-public companies, regression analysis, relational data

Procedia PDF Downloads 122

Authors: Abdul Ganiyu Iddrisu

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Digitization is the process of transforming analog material into digital form, especially for storage and use in a computer. Significant development of information and communication technology (ICT) over the past years has encouraged many researchers to investigate its contribution to promoting economic growth, and reducing poverty. Yet compelling empirical evidence on the effects of digitization on economic growth remains weak, particularly in Africa. This is because extant studies that explicitly evaluate digitization and economic growth nexus are mostly reports and desk reviews. This points out an empirical knowledge gap in the literature. Hypothetically, digitization influences financial sector development which in turn influences economic growth. Digitization has changed the financial sector and its operating environment. Obstacles to access to financing, for instance, physical distance, minimum balance requirements, low-income flows among others can be circumvented. Savings have increased, micro-savers have opened bank accounts, and banks are now able to price short-term loans. This has the potential to develop the financial sector, however, empirical evidence on digitization-financial development nexus is dearth. On the other hand, a number of studies maintained that financial sector development greatly influences growth of economies. We therefore argue that financial sector development is one of the transmission mechanisms through which digitization affects economic growth. Employing macro-country-level data from African countries and using fixed effects, random effects and Hausman-Taylor estimation approaches, this paper contributes to the literature by analysing economic growth in Africa focusing on the role of digitization, and financial sector development. First, we assess how digitization influence financial sector development in Africa. From an economic policy perspective, it is important to identify digitization determinants of financial sector development so that action can be taken to reduce the economic shocks associated with financial sector distortions. This nexus is rarely examined empirically in the literature. Secondly, we examine the effect of domestic credit to private sector and stock market capitalization as a percentage of GDP as used to proxy for financial sector development on 2 economic growth. Digitization is represented by the volume of digital/ICT equipment imported and GDP growth is used to proxy economic growth. Finally, we examine the effect of digitization on economic growth in the light of financial sector development. The following key results were found; first, digitalization propels financial sector development in Africa. Second, financial sector development enhances economic growth. Finally, contrary to our expectation, the results also indicate that digitalization conditioned on financial sector development tends to reduce economic growth in Africa. However, results of the net effects suggest that digitalization, overall, improves economic growth in Africa. We, therefore, conclude that, digitalization in Africa does not only develop the financial sector but unconditionally contributes the growth of the continent’s economies.

Keywords: digitalization, economic growth, financial sector development, Africa

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Authors: Joseph Paul Chunga

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The investment universe is awash with a myriad of financial choices that investors have to opt for, which principally culminates into a duality between aggressive or conservative approaches. Howbeit, it is pertinent to emphasize that the investment vehicles with an aggressive approach tend to take on more risk than the latter group in an effort to generate higher future returns for their respective investors. This study examines the conditionality effect that such partiality in financing has on the High-Tech and Public Utility companies listed on the Shenzhen Stock Exchange (SSE). Specifically, it examines the significance of the relationship between capitalization ratios of Total Debt Ratio (TDR), Degree of Financial Leverage (DFL) and profitability ratios of Earnings per Share (EPS) and Returns on Equity (ROE) on the Financial Risk of the two industries. We employ a modified version of the Panel Regression Model used by Rahman (2017) to estimate the relationship. The study finds that there is a significant positive relationship between the capitalization ratios on the financial risk of Public Utility companies more than High-Tech companies and a substantial negative relationship between the profitability ratios and the financial risk of the former than the latter companies. This then spells an important insight for prospective investors with regards to the volatility of earnings of such companies.

Keywords: financial leverage, debt financing, conservative firms, aggressive firms

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Authors: Adel M. Qatawneh

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This paper aimed to determine the importance of knowledge innovation for external audit on anti-corruption in the entire Jordanian bank companies are listed in Amman Stock Exchange (ASE). The study importance arises from the need to recognize the Knowledge innovation for external audit and anti-corruption as the development in the world of business, the variables that will be affected by external audit innovation are: reliability of financial data, relevantly of financial data, consistency of the financial data, Full disclosure of financial data and protecting the rights of investors to achieve the objectives of the study a questionnaire was designed and distributed to the society of the Jordanian bank are listed in Amman Stock Exchange. The data analysis found out that the banks in Jordan have a positive importance of Knowledge innovation for external audit on anti-corruption. They agree on the benefit of Knowledge innovation for external audit on anti-corruption. The statistical analysis showed that Knowledge innovation for external audit had a positive impact on the anti-corruption and that external audit has a significantly statistical relationship with anti-corruption, reliability of financial data, consistency of the financial data, a full disclosure of financial data and protecting the rights of investors.

Keywords: knowledge innovation, external audit, anti-corruption, Amman Stock Exchange

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Authors: I. Hakki Eraslan, Birol Ozturk, Istemi Comlekci

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This paper begins by defining what is meant by “globalization” in finance and by identifying the sources of value-added in the internationally-competitive financial services sector origination, trading and distribution of debt and equity capital market instruments and their derivatives, foreign exchange trading and securities brokerage, management of market risk and credit risk, loan syndication and structured bank financings, corporate finance and advisory services, and asset management. These activities are considered in terms of a “value-chain” one that ultimately gives rise to the real economic gains attributable to financial-center operations. The research presents available evidence as to where the relevant value-added activities usually take place. It then examines the “centrifugal” and “centripetal” forces that determine the concentration or dispersal of value-added activity in financial intermediation, both interregionally and internationally. Next, the research assesses the factors, which appear to underlie the locational pattern of international financial centers that has evolved. In preparing this paper, also it is examined the current position and the main opportunities and challenges facing world major financial services sector, and attempted to lay out a potential vision and strategies. It is conducted extensive research, including many internal research materials and publications. It is also engaged closely with the academia, industry practitioners and regulators, and consulted market experts from major world financial centers. More than 60 in‐depth consultative sessions were conducted in the past two years which provided insightful suggestions and innovative ideas on how to further financial industry’s position as an international financial centre. The paper concludes with the outlook for the future pattern of financial centers in the global competitive environment. The ideas and advice gathered are condensed into this paper that recommends to the strategic decision leaders a vision and a strategy for financial services sector to move forward amid a highly competitive environment.

Keywords: financial centers, competitiveness, financial services industry, economics

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Authors: Teguh Sugiarto, Amir Mohamadian Amiri

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Background: This study aims to explore if there is fraud in the company's financial report distribution using the number first digit Lucas, Fibonacci and Benford. Research methods: In this study, the author uses a number model contained in the first digit of the model Lucas, Fibonacci and Benford, to make a distinction between implementation by using the scale above and below 5%, the rate of occurrence of a difference against the digit number contained on Lucas, Fibonacci and Benford. If there is a significant difference above and below 5%, then the process of follow-up and detection of occurrence of fraud against the financial statements can be made. Findings: From research that has been done can be concluded that the number of frequency levels contained in the financial statements of PT Bank BRI Tbk in a year in the same conscientious results for model Lucas, Fibonacci and Benford.

Keywords: Lucas, Fibonacci, Benford, first digit

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Authors: Irni Rahmayani Johan, Ira Kamelia

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One of the impacts of the rapid advancement of technology is the rise of digital finance, including peer-to-peer lending (P2P). P2P lending has been widely marketed, including an online student loan that used the P2P platform. This study aims to analyze the effect of financial literacy, perception of debt, and perception of risk toward student willingness to use the online student loan (P2P lending). Using a cross-sectional study design, in collecting the data this study employed an online survey method, with a total sample of 280 undergraduate students of IPB university, Indonesia. This study found that financial literacy, perception of debt, perception of risk, and interest in using online student loans are categorized as low level. While the level of knowledge is found to be the lowest, the first-year students showed a higher level in terms of willingness to use the online student loan. In addition, the second year students recorded a positive perception toward debt. This study showed that level of study, attendance in personal finance course, and student’ GPA is positively related to financial knowledge. While debt perception is negatively related to financial attitudes. Similarly, the negative relationship is found between risk perception and the willingness to use the online student loan. The determinant factor of the willingness to use online student loans is the level of study, debt perception, financial risk perception, and time risk perception. Students with a higher level of study are more likely to have a lower interest in using online student loans. Moreover, students who perceived debt as a financial stimulator, as well as those with higher level of financial risk perceptions and time risk perceptions, tend to show more interest to use the loan.

Keywords: financial literacy, willingness to use, online student loan, perception of risk, perception of debt

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Authors: Raif Parlakkaya, Umran Kahraman, Huseyin Cetin

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Internet financial reporting and corporate governance issues are in the focus of academic and professional studies due to their attributed importance by stakeholders of corporations. Major aim of this study is to reveal the relationship between internet financial reporting which is held as dependent variable and some indicators of corporate governance such as the ratio of managerial ownership, blockholder ownership, number of independent members in the board of directors, frequency of meetings by audit committee and education level of audit committee members which are held as independent variables. Main purpose is to reveal the effect of corporate governance on the voluntary efforts of Internet Financial reporting. The scope of the research is limited to the Turkish Corporations listed in Borsa Istanbul (Istanbul Stock Exchange) and findings which are generated by means of SPSS software are revealed in results section and interpreted in conclusions.

Keywords: audit committee, corporate governance, internet financial reporting, managerial ownership

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Authors: Philemon Rakoto

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This paper tests the improvement of financial reporting quality when firms award stock options to their executives. The originality of this study is that we introduce the moderating effect of business ethics in the model. The sample is made up of 116 Canadian high-technology firms with available data for the fiscal year ending in 2012. We define the quality of financial reporting as the value relevance of accounting information as developed by Ohlson. Our results show that executive stock option award alone does not improve the quality of financial reporting. Rather, the quality improves when a firm awards stock options to its executives and investors perceive that the level of business ethics in that firm is high.

Keywords: business ethics, Canada, high-tech firms, stock options, value relevance

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Authors: Md Al Masum Bhuiyan, Maria C. Mariani, Osei K. Tweneboah

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In the present work, we develop a technique for estimating the volatility of financial time series by using stochastic differential equation. Taking the daily closing prices from developed and emergent stock markets as the basis, we argue that the incorporation of stochastic volatility into the time-varying parameter estimation significantly improves the forecasting performance via Maximum Likelihood Estimation. While using the technique, we see the long-memory behavior of data sets and one-step-ahead-predicted log-volatility with ±2 standard errors despite the variation of the observed noise from a Normal mixture distribution, because the financial data studied is not fully Gaussian. Also, the Ornstein-Uhlenbeck process followed in this work simulates well the financial time series, which aligns our estimation algorithm with large data sets due to the fact that this algorithm has good convergence properties.

Keywords: financial time series, maximum likelihood estimation, Ornstein-Uhlenbeck type models, stochastic volatility model

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Authors: T. Hansen

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Many consumers are uncertain of what financial borrowing behavior may serve their interests in the best way. This is important since consumers’ risky financial decisions may not only negatively affect their short-term liquidity but may haunt them for years after they are made. Obviously, this is especially critical for young adults who often carry large amounts of student loans or credit card debt, which in turn may hinder their future ability to obtain financial healthiness. Even though factors such as financial knowledge, attitudes towards risk, gender, and motivations of borrowing, among others, are known to influence consumer borrowing behavior, no existing model comprehensibly describes the mechanisms behind young adults’ risky borrowing behavior. This is unfortunate since a better understanding of the relationships between such factors and young adults’ risky borrowing behavior may be of value to financial service providers and financial authorities aiming to improve young adults’ borrowing behavior. This research extends prior research by developing a conceptual framework for the purpose of understanding young adults’ risky borrowing behavior. The study is based on two survey samples comprising 488 young adults aged 18-25 who have not obtained a risky loan (sample 1) and 214 young adults aged 18-25 who already have obtained a risky loan (sample 2), respectively. The results suggest several psychological, sociological, and behavioral factors that may influence young adults’ intentional risky borrowing behavior, which in turn is shown to affect actualized risky borrowing behavior. We also found that the relationship between intentional risky borrowing behavior and actualized risky borrowing behavior is negatively moderated by perceived risk – but not by perceived complexity. In particular, the results of this study indicate that public policy makers, banks and financial educators should seek to eliminate less desirable social norms on how to behave financially. In addition, they should seek to enhance young adults’ risky borrowing perceived risk, thereby preventing that intentional risky borrowing behavior translates into actualized risky behavior.

Keywords: financial services, risky borrowing behavior, young adults, financial knowledge, social norms, perceived risk, financial trust, public financial policy

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Authors: Abdul Ganiyu Iddrisu, Bei Chen

Abstract:

Digitization is the process of transforming analog material into digital form, especially for storage and use in a computer. Significant development of information and communication technology (ICT) over the past years has encouraged many researchers to investigate its contribution to promoting economic growth and reducing poverty. Yet the compelling empirical evidence on the effects of digitization on economic growth remains weak, particularly in Africa. This is because extant studies that explicitly evaluate digitization and economic growth nexus are mostly reports and desk reviews. This points out an empirical knowledge gap in the literature. Hypothetically, digitization influences financial sector development which in turn influences economic growth. Digitization has changed the financial sector and its operating environment. Obstacles to access to financing, for instance, physical distance, minimum balance requirements, and low-income flows, among others can be circumvented. Savings have increased, micro-savers have opened bank accounts, and banks are now able to price short-term loans. This has the potential to develop the financial sector. However, empirical evidence on the digitization-financial development nexus is dearth. On the other hand, a number of studies maintained that financial sector development greatly influences growth of economies. We, therefore, argue that financial sector development is one of the transmission mechanisms through which digitization affects economic growth. Employing macro-country-level data from African countries and using fixed effects, random effects and Hausman-Taylor estimation approaches, this paper contributes to the literature by analysing economic growth in Africa, focusing on the role of digitization and financial sector development. First, we assess how digitization influences financial sector development in Africa. From an economic policy perspective, it is important to identify digitization determinants of financial sector development so that action can be taken to reduce the economic shocks associated with financial sector distortions. This nexus is rarely examined empirically in the literature. Secondly, we examine the effect of domestic credit to the private sector and stock market capitalization as a percentage of GDP as used to proxy for financial sector development on economic growth. Digitization is represented by the volume of digital/ICT equipment imported and GDP growth is used to proxy economic growth. Finally, we examine the effect of digitization on economic growth in the light of financial sector development. The following key results were found; first, digitalization propels financial sector development in Africa. Second, financial sector development enhances economic growth. Finally, contrary to our expectation, the results also indicate that digitalization conditioned on financial sector development tends to reduce economic growth in Africa. However, results of the net effects suggest that digitalization, overall, improve economic growth in Africa. We, therefore, conclude that, digitalization in Africa does not only develop the financial sector but unconditionally contributes the growth of the continent’s economies.

Keywords: digitalization, financial sector development, Africa, economic growth

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Authors: Masa Popovac, Philip Fine

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Information and Communication Technologies (ICTs) have altered our social environments, and young people in particular have immersed themselves in the digital age. Despite countless benefits, younger ICT users are being exposed to various online risks such as contact with strangers, viewing of risky content, sending or receiving sexually themed images or comments (i.e. ‘sexting’) as well as cyber bullying. Parents may not be fully aware of the online spaces their children inhabit and often struggle to implement effective mediation strategies. This quantitative study explored (i) three types of online risks (contact risks, content risks and conduct risks), (ii) cyber bullying victimization and perpetration, and (iii) parental mediation among a sample of 689 South African adolescents aged between 12-17 years. Survey data was also collected for 227 of their parents relating to their perceptions of their child’s online experiences. A comparison between adolescent behaviors and parental perceptions was examined on the three variables in the study. Findings reveal various online risk taking behaviors. In terms of contact risks, 56% of adolescents reported having contact with at least one online stranger, with many meeting these strangers in person. Content risks included exposure to harmful information such as websites promoting extreme diets or self-harm as well as inappropriate content: 84% of adolescents had seen violent content and 75% had seen sexual content online. Almost 60% of adolescents engaged in conduct risks such as sexting. Eight online victimization behaviors were examined in the study and 79% of adolescents had at least one of these negative experiences, with a third (34%) defining this experience as cyber bullying. A strong connection between victimization and perpetration was found, with 63% of adolescents being both a victim and perpetrator. Very little parental mediation of ICT use was reported. Inferential statistics revealed that parents consistently underestimated their child’s online risk taking behaviors as well as their cyber bullying victimization and perpetration. Parents also overestimated mediation strategies in the home. The generational gap in the knowledge and use of ICTs is a barrier to effective parental mediation and online safety, since many negative online experiences by adolescents go undetected and can continue for extended periods of time thereby exacerbating the potential psychological and emotional distress. The study highlights the importance of including parents in online safety efforts.

Keywords: cyber bullying, online risk behaviors, parental mediation, South Africa

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Authors: Marianna Iaroslavska

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ChatGPT is becoming commonplace. However, only a few people think about the legal risks of using Large Language Model in their daily work. The main dilemmas concern the following areas: who owns the copyright to what somebody creates through ChatGPT; what can OpenAI do with the prompt you enter; can you accidentally infringe on another creator's rights through ChatGPT; what about the protection of the data somebody enters into the chat. This paper will present these and other legal risks of using large language models at work using dogmatic methods and case studies. The paper will present a legal analysis of AI risks against the background of European Union law and Polish law. This analysis will answer questions about how to protect data, how to make sure you do not violate copyright, and what is at stake with the AI Act, which recently came into force in the EU. If your work is related to the EU area, and you use AI in your work, this paper will be a real goldmine for you. The copyright law in force in Poland does not protect your rights to a work that is created with the help of AI. So if you start selling such a work, you may face two main problems. First, someone may steal your work, and you will not be entitled to any protection because work created with AI does not have any legal protection. Second, the AI may have created the work by infringing on another person's copyright, so they will be able to claim damages from you. In addition, the EU's current AI Act imposes a number of additional obligations related to the use of large language models. The AI Act divides artificial intelligence into four risk levels and imposes different requirements depending on the level of risk. The EU regulation is aimed primarily at those developing and marketing artificial intelligence systems in the EU market. In addition to the above obstacles, personal data protection comes into play, which is very strictly regulated in the EU. If you violate personal data by entering information into ChatGPT, you will be liable for violations. When using AI within the EU or in cooperation with entities located in the EU, you have to take into account a lot of risks. This paper will highlight such risks and explain how they can be avoided.

Keywords: EU, AI act, copyright, polish law, LLM

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Authors: Abraham Rotich

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The purpose of this study was to determine the effects of relationship banking on the financial performance of SMEs. The paper attempted to establish the link between the constructs of relationship banking and SME performance. The study was guided by relationship lending, relationship monitoring, relationship risk sharing and bundle of products as independent variables while financial performance will be the dependent variable. The study used a quasi experimental design with population being the 620 SMEs who have a relationship banking arrangement with banks in Nairobi. The study used stratified sampling to pick a sample of 235. The population of interest will be the CEOs of the respective companies. The basis of stratification is the sectors in which the SMEs operate in. The study will use a questionnaire to collect data. The questionnaire will have both open and close ended questions. A pilot study will be conducted to test reliability and validity of questionnaire. The data was analyzed using descriptive statistics. Regression analysis was employed to test if there is a relationship between the dependent and the independent variable. The study found evidence that relationship banking positively impacts on financial performance of SMEs. Specifically, the study established that each component of relationship banking in this study i.e relationship lending, monitoring, bundle of products and risk sharing positively affects financial performance.

Keywords: relationship banking, SMEs, financial performance, entrepreneurial orientation

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Authors: Yuhong Li, Luyu Mao

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Globalization has led to an increasingly interconnected international community and transmitted risks to every corner of the world through the chain of globalization. Security risks arising from international conflicts seem inescapable. Some countries have begun to build their capacity to deal with the globalization of security risks. They establish disembedding security mechanisms that transcend spatial or temporal boundaries and promote security cooperation with countries or regions that are not geographically close. This paper proposes four hypotheses of the phenomenon of "risks and security disembedding" in the post-Cold War international society and uses them to explain The United Kingdom’s behavior in the Bosnian War and the Russo-Ukrainian War. In the Bosnian War, confident in its own security and focused on maintaining European stability, The UK has therefore chosen to be cautious in its use of force in international frameworks such as the EU and to maintain a very limited intervention in Bosnia and Herzegovina's affairs. In contrast, the failure of the EU and NATO’s security mechanism in the Russo-Ukrainian war heightened Britain's anxiety, and the volatile international situation led it to show a strong tendency towards security disembedding, choosing to conclude security communities with extra-territorial states. Analysis suggests that security mechanisms are also the starting point of conflict and that countries will rely more on disembedding mechanisms to counteract the global security risks. The current mechanism of security disembedding occurs as a result of the global proliferation of security perceptions as a symbolic token and the recognition of an expert system of security mechanisms formed by states with similar security perceptions.

Keywords: disembedding mechanism, bosnia war, the russian-ukrainian war, british security strategy

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Authors: Shibly Abdullah

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This paper provides an overview of fundamental philosophical and functional differences in conventional and Islamic accounting. The aim of this research is to undertake a detailed analysis focus on specific illustrations drawn from both these systems and highlight how these differences implicate in recording financial transactions and preparation of financial reports for a range of stakeholders. Accounting as being universally considered as a platform for providing a ‘true and fair’ view of corporate entities can be challenged in the current world view, as the business environment has evolved and transformed significantly. Growth of the non-traditional corporate entity such as Islamic financial institutions, fundamentally questions the applicability of conventional accounting standards in preparation of Shariah-compliant financial reporting. Coupled with this, there are significant concerns about the wider applicability of Islamic accounting standards and framework in order to achieve reporting practices satisfying the information needs generally. Against the backdrop of such a context, this paper raises fundamental question as to how potential convergence could be achieved between these two systems in order to provide users’ a transparent and comparable state of financial information resulting in an alternative framework of financial reporting.

Keywords: accounting, conventional accounting, corporate reporting, Islamic accounting

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Authors: Manel Youssef, Lotfi Belkacem

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This paper employs multivariate long memory GARCH models to simultaneously estimate mean and conditional variance spillover effects between oil prices and different financial markets. Since different financial assets are traded based on these market sector returns, it’s important for financial market participants to understand the volatility transmission mechanism over time and across these series in order to make optimal portfolio allocation decisions. We examine weekly returns from January 1, 2003 to November 30, 2012 and find evidence of significant transmission of shocks and volatilities between oil prices and some of the examined financial markets. The findings support the idea of cross-market hedging and sharing of common information by investors.

Keywords: oil prices, stock indices returns, oil volatility, contagion, DCC-multivariate (FI) GARCH

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Authors: Matthias Nnadi

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Using samples of 250 large listed firms by market capitalization in China and Hong Kong, we conducted empirical test to determine the impact of regulatory environment on reporting quality following IFRS convergence using three financial reporting measures; earning management, timely loss recognition and value relevance. Our results indicate that accounting data are more value relevant for Hong Kong listed firms than the Chinese A-share firms. The empirical results for timely loss recognition further reveal that there is a larger coefficient estimate on bad news earnings, which suggests that Chines A-share firms are more likely to report losses in a timely manner. The results support the evidence that substantial convergence of IFRS can improve financial reporting quality in a regulated environment such as China. This further supports the expectation that IFRS are relevant to China and has positive effect on its accounting practice and quality.

Keywords: reporting, quality, earning, loss, relevance, financial, China, Hong Kong

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Authors: Sumohon Matilal, Neveen Abdelrehim

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The purpose of this study is to examine the way households manage the risks of civil war, using the calculative practices of accounting as a lens. As is the case with other social phenomena, accounting serves as a conduit for attributing values and rationales to crisis and in the process makes it visible and calculable. Our focus, in particular, is on the dialogue facilitated by the numerical logic of accounting between the householder and a crisis scenario, such as civil war. In other words, we seek to study how the risk of war is rationalized through household budgets, income and expenditure statements etc. and how such accounting constructs in turn shape attitudes toward earnings and spending in a wartime economy. The existing literature on war and accounting demonstrates how an accounting logic can have potentially destabilising consequences and how it is used to legitimise war. However, very few scholars have looked at the way accounting constructs are used to internalise the effects of war in an average household and the behavioural consequences that arise from such accounting. Relatedly, scholars studying household accounting have mostly focussed on the links between gender and hierarchy in relation to managing the financial affairs. Few have focused on the role of household accounts in a crisis scenario. This study intends to fill this gap. We draw upon Egypt, a country in the middle of civil war since 2011 for our purpose. We intend to carry out 15-20 semi-structured interviews with middle income households in Cairo that maintain some form of accounts to study the following issues: 1. How do people internalise the risks of civil war? What kind of accounting constructs do they use (this may take the form of simple budgets, income-expenditure notes/statements on a periodic basis, spreadsheets etc.) 2. How has civil war affected household expenditure? Are people spending more/less than before? 3. How has civil war affected household income? Are people finding it difficult/easy to survive on the pre-war income? 4. How is such accounting affecting household behaviour towards earnings and expenditure? Are families prioritising expenditure on necessities alone? Are they refraining from indulging in luxuries? Are family members doing two or three jobs to cope with difficult times? Are families increasingly turning toward borrowing? Is credit available? From whom?

Keywords: risk, accounting, war, crisis

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Authors: Rossouw De Bruin, Sebastiaan H. Von Solms

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The state of national security is an evolving concern. Companies, organizations, governments, states and individuals are aware of the security of their information and their assets however, they may not always be aware of the risks present. These risks are not only limited to non-existence of security procedures. Existing security can be severely flawed, especially if there is non-conformance towards policies, practices and procedures. When looking at humanitarian actions, we can easily identify these flaws. Unfortunately, humanitarian aid has to compete with factors from within the states, countries and continents they are working in. Furthermore, as technology improves, so does our connectivity to the internet and the way in which we use the internet. However, there are times when security is overlooked and humanitarian agencies are some of the agencies that do not always take security into consideration. The purpose of this paper will be to introduce the importance of cybersecurity and cybersecurity governance with respect to humanitarian work. We will also introduce and briefly discuss a model that can be used by humanitarian agencies to assess, manage and maintain their cybersecurity efforts.

Keywords: humanities, cybersecurity, cybersecurity governance, maturity, cybersecurity maturity, maturity model

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Authors: Philemon Rakoto

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Most executive compensation packages consist of four major components: base fixed salary, annual and long-term non-equity incentive plans, share-based and option-based awards and pension value. According to agency theory, the relative composition of executive compensation packages is one of the mechanisms that firms use to align the interests of executives and shareholders in order to mitigate agency costs. This paper tests the effect of the relative composition of executive compensation packages on financial reporting quality. Financial reporting quality is measured by the value relevance of accounting earnings. Corporate governance is a moderating variable in the model. Using data from Canadian firms composing S&P/TSX index of the year 2013 and governance scores based on Board Games, the analysis shows that, only for firms with good governance, there is an optimal level of the proportion of executive equity-based compensation in relation to total compensation that enhances the quality of financial reporting.

Keywords: Canada, corporate governance, executive compensation packages, financial reporting quality

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Authors: Stanley Yap Peng Lok, Chong Wei Ying, Leow Hon Wei, Fatemeh Kimiyaghalam

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Purpose: This paper examines how people treat on the importance of financial planning for their retirement. There is lack of standard instrument that enable us to access the retirement planning behavior. This paper studies the reliability and validity of a proposed scale for accessing this behavior. Design/methodology/approach: The Retirement Planning Behavior scale (RPB) is developed from the results of reviewing different papers on this topic. A total of 900 Malaysians from the age of 18 and above are used as the sample. Findings: Our results show, firstly, the RPB meets all criteria from the instrument reliability and validity which based on the theory of planned behavior. Second, our findings propose two components for this RPB scale; attitude toward planning for retirement and intention towards retirement planning behavior. Practical implication: An effective retirement planning achieves financial independence after the retirement. Our findings have important implications for the scope and significance of the retirement planning behavior measurement, especially for retirees. Originality/value: This study proposes a new approach to cater consumers’ needs for retirement planning. Therefore, consumers are able to achieve financial independence in their retirement age.

Keywords: retirement planning behavior (RPB) scale, reliability, validity, retirement planning, financial independence

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Authors: Shanshan Zhu, Mohammad Nasim

Abstract:

Financial fraud continues to be a major threat to financial institutions across the world, causing colossal money losses and undermining public trust. Fraud prevention techniques, based on hard rules, have become ineffective due to evolving patterns of fraud in recent times. Against such a background, the present study probes into distinct methodologies that exploit emergent AI-driven techniques to further strengthen fraud detection. We would like to compare the performance of generative adversarial networks and graph neural networks with other popular techniques, like gradient boosting, random forests, and neural networks. To this end, we would recommend integrating all these state-of-the-art models into one robust, flexible, and smart system for real-time anomaly and fraud detection. To overcome the challenge, we designed synthetic data and then conducted pattern recognition and unsupervised and supervised learning analyses on the transaction data to identify which activities were fishy. With the use of actual financial statistics, we compare the performance of our model in accuracy, speed, and adaptability versus conventional models. The results of this study illustrate a strong signal and need to integrate state-of-the-art, AI-driven fraud detection solutions into frameworks that are highly relevant to the financial domain. It alerts one to the great urgency that banks and related financial institutions must rapidly implement these most advanced technologies to continue to have a high level of security.

Keywords: AI-driven fraud detection, financial security, machine learning, anomaly detection, real-time fraud detection

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Authors: Qingliang Tang

Abstract:

The transition from voluntary to mandatory carbon reporting (also refers to climate reporting) poses serious challenges for accounting professionals aiming to support firms in achieving net-zero goals. The accounting literature addresses the topics that are currently bewildering accounting academics and professional accountants on how to make accounting as a useful tool for the management to achieve a carbon neutral business model. This paper explores the evolving role of carbon accounting within corporate financial reporting systems, emphasizing its integration as a crucial component. Key challenges addressed include data availability, climate risk assessment, defining reporting boundaries, selecting appropriate greenhouse gas (GHG) accounting methodologies, and integrating climate-related events into traditional financial statements. A dynamic, integrated carbon accounting framework is proposed to facilitate this transformative process effectively. Furthermore, the paper identifies critical knowledge gaps and sets forth a research agenda aimed at enhancing transparency and relevance in carbon accounting and reporting systems, thereby empowering informed decision-making. The purpose of the paper is to succinctly capture the essence of carbon accounting practice in the transitional period, focusing on the challenges, proposed solutions, and future research directions in the realm of carbon accounting and mandatory climate reporting.

Keywords: mandatory carbon reporting, carbon management, net zero target, sustainability, climate risks

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Authors: Paschal Ohalehi

Abstract:

Purpose - The purpose of this paper, which is part of a PhD thesis is to examine the role of risk based approach in minimising financial crime in the charity sector as well as offer recommendations to improving the quality of charity regulation whilst still retaining risk based approach as a regulatory framework and also making a case for a new regulatory model. Increase in financial crimes in the charity sector has put the role of regulation in minimising financial crime up for debates amongst researchers and practitioners. Although previous research has addressed the regulation of charities, research on the role of risk based approach to minimising financial crime in the charity sector is limited. Financial crime is a concern for all organisation including charities. Design/methodology/approach - This research adopts a social constructionist’s epistemological position. This research is carried out using semi structured in-depth interviews amongst randomly selected 24 charity trustees divided into three classes: 10 small charities, 10 medium charities and 4 large charities. The researcher also interviewed 4 stakeholders (NFA, Charity Commission and two different police forces in terms of size and area of coverage) in the charity sector. Findings - The results of this research show that reliance on risk based approach to financial crime in the sector is weak and fragmented with the research pointing to a clear evidence of disconnect between the regulator and the regulated leading to little or lack of regulation of trustees’ activities, limited monitoring of charities and lack of training and awareness on financial crime in the sector. Originality – This paper shows how regulation of charities in general and risk based approach in particular can be improved in order to meet the expectations of the stakeholders, the public, the regulator and the regulated.

Keywords: risk, risk based approach, financial crime, fraud, self-regulation

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Authors: Y. Tahat, T. Dunne, S. Fifield, D. Power

Abstract:

Information about a firm’s usage of Financial Instruments (FIs) plays a very important role in determining its financial position and performance. Yet accounting standard-setters have encountered problems when deciding on the FI-related disclosures which firms must make. The primary objective of this paper is to review the extant literature on FI disclosure. This objective is achieved by surveying the literature on: the corporate usage of FIs; the different accounting standards adopted concerning FIs; and empirical studies on FI disclosure. This review concludes that the current research on FI disclosure has generated a number of useful insights. In particular, the paper reports that: FIs are a very important risk management mechanism in ensuring that companies have the cash available to make value-enhancing investments, however, without a clear set of risk management objectives, using such instruments can be dangerous; accounting standards concerning FIs have resulted in enhanced transparency about the usage of these instruments; and FI-related information is a key input into investors’ decision-making processes. Finally, the paper provides a number of suggestions for future research in the area.

Keywords: financial instruments, financial reporting, accounting standards, value relevance, corporate disclosure

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Authors: K. Matušínská, H. Starzyczná, M. Stoklasa

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The paper deals with finding and describing of the effective marketing communication forms relating to the segment 50+ in the financial market in the Czech Republic. The segment 50+ can be seen as a great marketing potential in the future but unfortunately the Czech financial institutions haven´t still reacted enough to this fact and they haven´t prepared appropriate marketing programs for this customers´ segment. Demographic aging is a fundamental characteristic of the current European population evolution but the perspective of further population aging is more noticeable in the Czech Republic. This paper is based on data from one part of primary marketing research. Paper determinates the basic problem areas as well as definition of marketing communication in the financial market, defining the primary research problem, hypothesis and primary research methodology. Finally suitable marketing communication approach to selected sub-segment at age of 50-60 years is proposed according to marketing research findings.

Keywords: population aging in the Czech Republic, segment 50+, financial services, marketing communication, marketing research, marketing communication approach

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Authors: Kerem Ok, Serafettin Senturk, Serdar Aktas, Cem Cevikbas

Abstract:

Mobile technology is very popular nowadays and it provides a digital world where users can experience many value-added services. Service Providers are also eager to offer diverse value-added services to users such as digital identity, mobile financial services and so on. In this context, the security of data storage in smartphones and the security of communication between the smartphone and service provider are critical for the success of these services. In order to provide the required security functions, the SIM card is one acceptable alternative. Since SIM cards include a Secure Element, they are able to store sensitive data, create cryptographically secure keys, encrypt and decrypt data. In this paper, we design and implement a SIM and a smartphone framework that uses a SIM card for secure key generation, key storage, data encryption, data decryption and digital signing for mobile financial services. Our frameworks show that the SIM card can be used as a controlled Secure Element to provide required security functions for popular e-services such as mobile financial services.

Keywords: SIM card, mobile financial services, cryptography, secure data storage

Procedia PDF Downloads 313