Search results for: securities

Authors: Satish Kumar, Nisha Goyal

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In the stock market, individual investors exhibit different kinds of behaviour. Traditional finance is built on the notion of 'homo economics', which states that humans always make perfectly rational choices to maximize their wealth and minimize risk. That is, traditional finance has concern for how investors should behave rather than how actual investors are behaving. Behavioural finance provides the explanation for this phenomenon. Although finance has been studied for thousands of years, behavioural finance is an emerging field that combines the behavioural or psychological aspects with conventional economic and financial theories to provide explanations on how emotions and cognitive factors influence investors’ behaviours. These emotions and cognitive factors are known as behavioural biases. Because of these biases, investors make irrational investment decisions. Besides, the emotional and cognitive factors, the social influence of media as well as friends, relatives and colleagues also affect investment decisions. Psychological factors influence individual investors’ investment decision making, but few studies have used qualitative methods to understand these factors. The aim of this study is to explore the behavioural factors or biases that affect individuals’ investment decision making. For the purpose of this exploratory study, an in-depth interview method was used because it provides much more exhaustive information and a relaxed atmosphere in which people feel more comfortable to provide information. Twenty investment advisors having a minimum 5 years’ experience in securities firms were interviewed. In this study, thematic content analysis was used to analyse interview transcripts. Thematic content analysis process involves analysis of transcripts, coding and identification of themes from data. Based on the analysis we categorized the statements of advisors into various themes. Past market returns and volatility; preference for safe returns; tendency to believe they are better than others; tendency to divide their money into different accounts/assets; tendency to hold on to loss-making assets; preference to invest in familiar securities; tendency to believe that past events were predictable; tendency to rely on the reference point; tendency to rely on other sources of information; tendency to have regret for making past decisions; tendency to have more sensitivity towards losses than gains; tendency to rely on own skills; tendency to buy rising stocks with the expectation that this rise will continue etc. are some of the major concerns showed by experts about investors. The findings of the study revealed 13 biases such as overconfidence bias, disposition effect, familiarity bias, framing effect, anchoring bias, availability bias, self-attribution bias, representativeness, mental accounting, hindsight bias, regret aversion, loss aversion and herding bias/media biases present in Indian investors. These biases have a negative connotation because they produce a distortion in the calculation of an outcome. These biases are classified under three categories such as cognitive errors, emotional biases and social interaction. The findings of this study may assist both financial service providers and researchers to understand the various psychological biases of individual investors in investment decision making. Additionally, individual investors will also be aware of the behavioural biases that will aid them to make sensible and efficient investment decisions.

Keywords: financial advisors, individual investors, investment decisions, psychological biases, qualitative thematic content analysis

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Authors: Onur Arugaslan, Ajay Samant, Devrim Yaman

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Financial advisors and investors seek new assets which could potentially increase portfolio returns and decrease portfolio risk. Cryptocurrencies represent a relatively new asset class which could serve in both these roles. There has been very little research done in the area of the risk/return tradeoff in a portfolio consisting of fixed income assets, stocks, and cryptocurrency. The objective of this study is a rigorous examination of this issue. The data used in the study are the monthly returns on 4-week US Treasury Bills, S&P Investment Grade Corporate Bond Index, Bitcoin and the S&P 500 Stock Index. The methodology used in the study is the application Modern Portfolio Theory to evaluate the risk-adjusted returns of portfolios with varying combinations of these assets, using Sharpe, Treynor and Jensen Indexes, as well as the Sortino and Modigliani measures. The results of the study would include the ranking of various investment portfolios based on their risk/return characteristics. The conclusions of the study would include objective empirical inference for investors who are interested in including cryptocurrency in their asset portfolios but are unsure of the risk/return implications.

Keywords: financial economics, portfolio diversification, fixed income securities, cryptocurrency, stock indexes

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Authors: Ayman Haddad, Wafaa Sbeiti, Amr Qasem

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The main aim of this paper is to provide an overview of the most influential economic changes and accounting legislation affecting financial reporting and disclosure practices in Jordan. It also provides an overview of disclosure studies conducted in Jordan covering the year(s) between 1986 and 2014. The economic changes in Jordan required conducting economic reform and revising/issuing new regulations and financial market reforms that led to an improvement in disclosure practices. The issuance of Temporary Securities Law and its Directives of Disclosure in 1997, which came into effect in 1998, is considered as the turning point in the improvement of disclosure practice in Jordan. Based on a review of prior disclosure studies, we conclude that disclosure practices have improved overtime. We also observe that that firm size as a factor has always affected the level of disclosure in Jordan and followed by external auditing while liquidity was found to have the least effect. The paper also addresses the disclosure items required in Corporate Governance Codes that exist for listed shareholding companies, banks, and insurance companies. Finally, the paper discusses the quality of accounting education in Jordan since prior studies noted its impact on accounting practice.

Keywords: accounting legislation, corporate governance, disclosure practice, Jordan

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Authors: L. Totladze

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The role of financial sector in supporting economic growth and development is well acknowledged. The term spread (the difference between the yields on long-term and short-term Treasury securities) has been found useful for predicting economic variables as output growth, inflation, industrial production, consumption. The temp spread is one of the leading economic indicators according to NBER methodology. Leading economic indicators are widely used in forecasting of economic activity. Many empirical studies find that the term spread predicts future economic activity. The article shortly explains how the term spread might predict future economic activity. This paper analyses the dynamics of the spread between short and long-term interest rates in countries with transition economies. The research paper analyses term spread dynamics in Georgia and compare it with post-communist countries and transition economies spread dynamics. In Georgia, the banking sector plays an important and dominant role in the financial sector, especially with respect to the mobilization of savings and provision of credit and may impact on economic activity. For this purpose, we study the impact of the term spread on economic growth in Georgia.

Keywords: forecasting, leading economic indicators, term spread, transition economies

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Authors: Jun Wang, Ge Zhang

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Machine learning has been used in many areas today. It thrives at reviewing large volumes of data and identifying patterns and trends that might not be apparent to a human. Given the huge potential benefit and the amount of data available in the financial market, it is not surprising to see machine learning applied to various financial products. While future prices of financial securities are extremely difficult to forecast, we study them from a different angle. Instead of trying to forecast future prices, we apply machine learning algorithms to predict the direction of future price movement, in particular, whether a sector Exchange Traded Fund (ETF) would outperform or underperform the market in the next week or in the next month. We apply several machine learning algorithms for this prediction. The algorithms are Linear Discriminant Analysis (LDA), k-Nearest Neighbors (KNN), Decision Tree (DT), Gaussian Naive Bayes (GNB), and Neural Networks (NN). We show that these machine learning algorithms, most notably GNB and NN, have some predictive power in forecasting out-performance and under-performance out of sample. We also try to explore whether it is possible to utilize the predictions from these algorithms to outperform the buy-and-hold strategy of the S&P 500 index. The trading strategy to explore out-performance predictions does not perform very well, but the trading strategy to explore under-performance predictions can earn higher returns than simply holding the S&P 500 index out of sample.

Keywords: machine learning, ETF prediction, dynamic trading, asset allocation

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Authors: Frankie Burgos, Emely Munar, Conrado Basa

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This paper aimed at developing an artificial neural network (ANN) model specifically for the Philippine Stock Exchange index closing value. The inputs to the ANN are US Dollar and Philippine Peso(USD-PHP) exchange rate, GDP growth of the country, quarterly inflation rate, 10-year bond yield, credit rating of the country, previous open, high, low, close values and volume of trade of the Philippine Stock Exchange Index (PSEi), gold price of the previous day, National Association of Securities Dealers Automated Quotations (NASDAQ), Standard and Poor’s 500 (S & P 500) and the iShares MSCI Philippines ETF (EPHE) previous closing value. The target is composed of the closing value of the PSEi during the 627 trading days from November 3, 2011, to May 30, 2014. MATLAB’s Neural Network toolbox was employed to create, train and simulate the network using multi-layer feed forward neural network with back-propagation algorithm. The results satisfactorily show that the neural network developed has the ability to model the PSEi, which is affected by both internal and external economic factors. It was found out that the inputs used are the main factors that influence the movement of the PSEi closing value.

Keywords: artificial neural networks, artificial intelligence, philippine stocks exchange index, stocks trading

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Authors: B. Marasović, S. Pivac, S. V. Vukasović

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Constructing a portfolio of investments is one of the most significant financial decisions facing individuals and institutions. In accordance with the modern portfolio theory maximization of return at minimal risk should be the investment goal of any successful investor. In addition, the costs incurred when setting up a new portfolio or rebalancing an existing portfolio must be included in any realistic analysis. In this paper rebalancing an investment portfolio in the presence of transaction costs on the Croatian capital market is analyzed. The model applied in the paper is an extension of the standard portfolio mean-variance optimization model in which transaction costs are incurred to rebalance an investment portfolio. This model allows different costs for different securities, and different costs for buying and selling. In order to find efficient portfolio, using this model, first, the solution of quadratic programming problem of similar size to the Markowitz model, and then the solution of a linear programming problem have to be found. Furthermore, in the paper the impact of transaction costs on the efficient frontier is investigated. Moreover, it is shown that global minimum variance portfolio on the efficient frontier always has the same level of the risk regardless of the amount of transaction costs. Although efficient frontier position depends of both transaction costs amount and initial portfolio it can be concluded that extreme right portfolio on the efficient frontier always contains only one stock with the highest expected return and the highest risk.

Keywords: Croatian capital market, Markowitz model, fractional quadratic programming, portfolio optimization, transaction costs

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Authors: Elizabeth Snyman-Van Deventer

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Numerous corporate scandals, which included investment scams, corporate malfeasance, unethical conduct and conflicts of interest, contributed to the collapse of WorldCom, Global Crossing, Xerox, Tyco, Enron, Sprint, AbbVie and Imclone and led to alarmed investors abandoning public securities markets and the tumbling of U.S stock markets. These companies suffered significant financial losses due to substantial and fraudulent misstatements and other illegal, corrupt or unethical practices. Executives were convicted of fraud and sentenced to prison. The corporate financial scandals, governance failures, and the ensuing public outcries led to mandatory legislation, e.g. the Sarbanes-Oxley Act in the USA. In European corporate scandals such as Parmalat, Royal Dutch Ahold, Vivendi, Adecco and Elan, the boards missed financial misrepresentations. In South Africa, Steinhoff is the most well-known example of corporate collapse, but now we can also add Tongaat Hulett. It seems as if fraud and corruption may be the major sources of these corporate collapses. In most instances, there is either the active involvement of the directors and managers in these fraudulent or corrupt practices, or there is a negligent or even intentional failure to act by directors to prevent these activities. However, besides directors and managers, auditors and lawyers failed in most of these companies to fulfil their professional duties. In most of these major collapses, the ethics of especially auditors and directors could be questioned. This paper will first provide a brief overview of corporate collapses. Secondly, the reasons for these collapses, with a focus on unethical conduct, will be discussed.

Keywords: professional duties, corporate collapses, ethical conduct, legal ethics, directors, auditors

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Authors: Yuanyi (Richard) Fang

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Under the theory of La Porta, Lopez-de-Silanes, Shleifer, and Vishny, if a country can increase its legal protections for minority shareholders, the country can develop an ideal securities market that only arises under the dispersed ownership corporate governance. However, the path-dependence scholarship, such as Lucian Arye Bebchuk and Mark J. Roe, presented a different view with LLS&V. They pointed out that the initial framework of the ownership structure and traditional culture will prevent the change of the corporate governance structure through legal reform. This paper contends that traditional culture factors as an important aspect when forming the corporate governance structure. However, it is not impossible for the government to change its traditional corporate governance structure and traditional culture because the culture does not remain intact. Culture evolves with time. The occurrence of the important events will affect the people’s psychological process. The psychological process affects the evolution of culture. The new cultural norms can help defeat the force of the traditional culture and the resistance from the initial corporate ownership structure. Using Taiwan as an example, through analyzing the historical background, related corporate rules and the reactions of adoption new rules from the media, this paper try to show that Taiwan’s culture norms do not remain intact and have changed with time. It further provides that the culture is not always the hurdle for the adoption of the dispersed ownership corporate governance structure as the culture can change. A new culture can provide strong support for the adoption of the new corporate governance structure.

Keywords: LLS&V theory, corporate governance, culture, path–dependent theory

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Authors: Badar Khalid Hakim Alshabibi

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This study aims to examine the determinants of corporate board diligence in the listed firm in Sultanate of Oman, using four corporate board characteristics, the board size, board independence, board gender diversity, and nationality diversity. Design/methodology/approach: Using a sample comprised of all companies listed in the Muscat Securities Exchange over a ten-year period (2009–2019), the study applies Pooled OLS regression to examine the determinants of corporate board diligence. Findings: Drawing from the agency theory and institutional theory, the results reveal that the number of independent board members had statistical significance, suggesting that board independence can improve corporate board diligence, though board size and nationality diversity were found to have a negative association with corporate board diligence. There is no evidence, however, that board gender diversity improves corporate board diligence. Practical implications: The study provides insights for both the investors and regulatory authorities in developing economies. For the investors to be aware about the corporate board characteristics which enhance board monitoring, and for the regulatory authorities to consider revising the corporate governance codes which enhance the quality of governance practices. Originality/value: The study provides new evidence documenting the determinants of corporate board diligence in a developing country such as the Sultanate of Oman, which has a high potential for growth and attracting foreign investment, as stated in Oman vision 2040. In addition, this paper is the first to examine the association between corporate board diligence and corporate board diversity aspects.

Keywords: board diligence, board monitoring, board composition, board diversity, oman

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Authors: Ernest Nweke, Enkhtuya Bavuudorj

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The Mongolia Stock Exchange (MSE) serves as a vehicle for executing the privatization policy of Mongolian Government as it transitioned from socialist to free market economy. It was also the intention of the Government to develop the investment and securities market through its establishment and to further boost the ailing Mongolian economy. This paper focuses on the contributions of the Mongolian Stock Exchange (MSE) to the industrial and economic development of Mongolia via Corporate fund mobilization for listed companies in Mongolia. A study of this nature is imperative as economic development in Mongolia has been accelerated by corporate investments. The key purpose of the research was to critically analyze the operations of the MSE to ascertain the extent to which the objectives for which it was established have been accomplished and to assess its contributions to industrial and economic development of Mongolia. In achieving this, secondary data on the activities of the MSE; its market capitalization over the years were collected and analyzed vis-à-vis the figures for Mongolia’s macro-economic data for the same time period to determine whether the progressive increase in market capitalization of the MSE has positively impacted on Mongolia’s economic growth. Regression analysis package was utilized in dissecting the data. It was proven that the Mongolian Stock Exchange has contributed positively and significantly to Mongolia’s economic development though not yet to the desired level. Against the findings of this research, recommendations were made to address, the problems facing the MSE and to enhance its performance and ultimately its contributions to industrial and economic development of the Mongolian nation.

Keywords: Corporate Fund Mobilization, Gross Domestic Product (GDP), market capitalization, purchasing power, stock exchange

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Authors: Samuel B. Dulay, Sandra Julich, Herbert Tomaso, Ciara K. O'Sullivan

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An early, rapid and definite detection for the presence of biowarfare agents, pathogens, viruses and toxins is required in different situations which include civil rescue and security units, homeland security, military operations, public transportation securities such as airports, metro and railway stations due to its harmful effect on the human population. In this work, an electrochemical genosensor array that allows simultaneous detection of different biowarfare agents within an integrated microsystem that provides an easy handling of the technology which combines a microfluidics setup with a multiplexing genosensor array has been developed and optimised for the following targets: Bacillus anthracis, Brucella abortis and melitensis, Bacteriophage lambda, Francisella tularensis, Burkholderia mallei and pseudomallei, Coxiella burnetii, Yersinia pestis, and Bacillus thuringiensis. The electrode array was modified via co-immobilisation of a 1:100 (mol/mol) mixture of a thiolated probe and an oligoethyleneglycol-terminated monopodal thiol. PCR products from these relevant biowarfare agents were detected reproducibly through a sandwich assay format with the target hybridised between a surface immobilised probe into the electrode and a horseradish peroxidase-labelled secondary reporter probe, which provided an enzyme based electrochemical signal. The potential of the designed microsystem for multiplexed genosensor detection and cross-reactivity studies over potential interfering DNA sequences has demonstrated high selectivity using the developed platform producing high-throughput.

Keywords: biowarfare agents, genosensors, multipled detection, microsystem

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Authors: Ichiro Mukai

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The purpose of this study is to investigate whether firms applying International Financial Reporting Standards (IFRS), provide high-quality and comparable earnings information that is useful for decision making of information users relative to firms applying local Generally Accepted Accounting Principles (GAAP). Focus is placed on the earnings quality of listed firms in several developed countries: Australia, Canada, France, Germany, Japan, the United Kingdom (UK), and the United States (US). Except for Japan and the US, the adoption of IFRS is mandatory for listed firms in these countries. In Japan, the application of IFRS is allowed for specific listed firms. In the US, the foreign firms listed on the US securities market are permitted to apply IFRS but the listed domestic firms are prohibited from doing so. In this paper, the differences in earnings quality are compared between firms applying local GAAP and those applying IFRS in each country and industry category, and the reasons of differences in earnings quality are analyzed using various factors. The results show that, although the earnings quality of firms applying IFRS is higher than that of firms applying local GAAP, this varies with country and industry category. Thus, even if a single set of global accounting standards is used for all listed firms worldwide, it is difficult to establish comparability of financial information among global firms. These findings imply that various circumstances surrounding firms, industries, and countries etc. influence business operations and affect the differences in earnings quality.

Keywords: accruals, earnings quality, IFRS, information comparability

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Authors: Olivia Rybak-Karkosz

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This paper aims to present the results of scientific research on methods of forging art prints and their elements, such as signature or provenance and forensic science methods that might be used to verify their authenticity. In the last decades, the art market has observed significant interest in purchasing prints. They are considered an economical alternative to paintings and a considerable investment. However, the authenticity of an art print is difficult to establish as similar visual effects might be achieved with drawings or xerox. The latter is easy to make using a home printer. They are then offered on flea markets or internet auctions as genuine prints. This probable ease of forgery and, at the same time, the difficulty of distinguishing art print techniques were the main reasons why this research was undertaken. A lack of scientific methods dedicated to disclosing a forgery encouraged the author to verify the possibility of using forensic science's methods known and used in other fields of expertise. This research methodology consisted of completing representative forgery samples collected in selected museums based in Poland and a few in Germany and Austria. That allowed the author to present a typology of methods used to forge art prints. Given that one of the most famous graphic design examples is bills and securities, it seems only appropriate to propose in print verification the usage of methods of detecting counterfeit currency. These methods contain an examination of ink, paper, and watermarks. On prints, additionally, signatures and imprints of stamps, etc., are forged as well. So the examination should be completed with handwriting examination and forensic sphragistics. The paper contains a stipulation to conduct a complex analysis of authenticity with the participation of an art restorer, art historian, and forensic expert as head of this team.

Keywords: art forgery, examination of an artwork, handwriting analysis, prints

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Authors: Joel S. Akintayo, Ramat T. Salman

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The stakeholders’ pressure on corporate managers to maintain firm’s profitability has created economic incentives for management to engage in earnings management practices. Therefore, this study examines the effects of audit quality and corporate governance on earnings management of quoted deposit money banks (DMBs) in Nigeria. This study specifically investigates the influence of audit tenure, audit fee, board independence, and board size on earnings management of DMBs. Explanatory research design was employed in carrying out the study while secondary data were sourced from the annual reports and accounts of all the 15 quoted DMBs in Nigerian Stock Exchange as at December 31, 2015 for a period of 10 years covering from 2006 to 2015. The data obtained for the study were analyzed using panel regression analysis approach. The findings reveal that board independence has a negative significant effect on earnings management at a 5% level of significance (p=0.002), while audit fee has a positive significant effect on earnings management at a 5% level of significance (p=0.013) and audit tenure has a negative significant effect on earnings management of DMBs at a 5% level of significance (p=0.003). Surprisingly, board size was statistically not significant at a 5% level of significance (p=0.086). The study concludes that high audit quality and sound corporate governance could improve the earnings quality of DMBs. Hence, the study recommends that the authorities saddled with the responsibility of banking supervision in Nigeria such the Securities and Exchange Commission (SEC) and CBN to advise the National Assembly in Nigeria to pass into law the three years professional requirement for audit tenure.

Keywords: audit quality, audit tenure, audit fee, board independence, corporate governance, earnings management

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Authors: Jessy Abouarab

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For more than half a century, international norms related to refugee security and protection have proliferated, yet their role in alleviating war’s negative impacts on human life remains limited. The impact of refugee-security processes often manifests asymmetrically within populations. Many issues and people get silenced due to narrow security policies that focus either on abstract threat containment and refugee control or refugee protection and humanitarian aid. (In)security practices are gendered and experienced. Examining the case study of Syrian refugees in Lebanon, this study explores the gendered impact of refugee security mechanisms on local realities. A transnational feminist approach will be used to position this research in relation to existing studies in the field of security and the refugee-protection regime, highlighting the social, cultural, legal, and political barriers to gender equality in the areas of violence, rights, and social inclusion. Through Photovoice methodology, the Syrian refugees’ (in)securities in Lebanon were given visibility by enabling local volunteers to record and reflect their realities through pictures, at the same time voice the participants’ anxieties and recommendations to reach normative policy change. This Participatory Action Research approach helped participants observe the structural barriers and lack of culturally inclusive refugee services that hinder security, increase discrimination, stigma, and poverty. The findings have implications for a shift of the refugee protection mechanisms to a community-based approach in ways that extend beyond narrow security policies that hinder women empowerment and raise vulnerabilities such as gendered exploitation, abuse, and neglect.

Keywords: gender, (in)security, Lebanon, refugee, Syrian refugees, women

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Authors: Abiodun O. Ibude

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Several organizations have devised the strategy of engaging the services of staff not directly employed by them in their production and service delivery. Some organizations also engage on contracting another organization to carry out a part of service or production process on their behalf. Outsourcing is becoming an important alternative employment option for most organizations. This paper attempts an exposition on the rights of workers within the more specific context of outsourcing as a human resource management phenomenon. Outsourced employees and their rights are treated conceptually and analytically in a generic sense as a mere subset of the larger whole, that is, labor. Outsourced employees derive their rights, like all workers, from their job context as well as the legal environment (municipal and global) in which they operate. The dynamics of globalization and the implications of this development for labor practices receive considerable attention in this exposition. In this regard, a guarded proposition is made, to examine the practice and effect of engaging outsourcing as an economic decision designed primarily to cut down on operational costs rather than a Human Resources Management decision to improve worker welfare. The population of the study was selected from purposive and simple random sampling techniques. Data obtained were analyzed through a simple percentage, Pearson product-moment correlation, and cross-tabulation. From the research conducted, it was discovered that, although outsourcing possesses opportunities for organizations, there are drawbacks arising from its implementation of job securities. It was also discovered that some employees are being exploited through this strategy. This gives rise to lower motivation and thereby decline in performance. In conclusion, there is need for examination of Human Resource Managers’ strategies that can serve as management policy tools for the protection of the rights of outsourced employees.

Keywords: legal environment, operational cost, outsourcing, protection

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Authors: Leizhang Wang, Baocang Wang

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General Sieve Kernel (G6K) is considered as currently the fastest algorithm for the shortest vector problem (SVP) and record holder of open SVP challenge. We study the lattice basis quality improvement effects of the Workout proposed in G6K, which is composed of a series of pumps to solve SVP. Firstly, we use a low-dimensional pump output basis to propose a predictor to predict the quality of high-dimensional Pumps output basis. Both theoretical analysis and experimental tests are performed to illustrate that it is more computationally expensive to solve the LWE problems by using a G6K default SVP solving strategy (Workout) than these lattice reduction algorithms (e.g. BKZ 2.0, Progressive BKZ, Pump, and Jump BKZ) with sieving as their SVP oracle. Secondly, the default Workout in G6K is optimized to achieve a stronger reduction and lower computational cost. Thirdly, we combine the optimized Workout and the Pump output basis quality predictor to further reduce the computational cost by optimizing LWE instances selection strategy. In fact, we can solve the TU LWE challenge (n = 65, q = 4225, = 0:005) 13.6 times faster than the G6K default Workout. Fourthly, we consider a combined two-stage (Preprocessing by BKZ- and a big Pump) LWE solving strategy. Both stages use dimension for free technology to give new theoretical security estimations of several LWE-based cryptographic schemes. The security estimations show that the securities of these schemes with the conservative Newhope’s core-SVP model are somewhat overestimated. In addition, in the case of LAC scheme, LWE instances selection strategy can be optimized to further improve the LWE-solving efficiency even by 15% and 57%. Finally, some experiments are implemented to examine the effects of our strategies on the Normal Form LWE problems, and the results demonstrate that the combined strategy is four times faster than that of Newhope.

Keywords: LWE, G6K, pump estimator, LWE instances selection strategy, dimension for free

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Authors: Ali Alsawayeh, Ibrahim Eldanfour

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This paper examines the extent of disclosure of oil and gas reserve quantum in annual reports of international oil and gas exploration and production companies, particularly companies in untested international markets, such as Canada, the UK and the US, and seeks to determine the underlying factors that affect the level of disclosure on oil reserve quantum. The study is concerned with the usefulness of disclosure of oil and gas reserves quantum to investors and other users. Given the primacy of the annual report (10-k) as a source of supplemental reserves data about the company and as the channel through which companies disseminate information about their performance, the annual reports for one year (2009) were the central focus of the study. This comparative study seeks to establish whether differences exist between the sample companies, based on new disclosure requirements by the Securities and Exchange Commission (SEC) in respect of reserves classification and definition. The extent of disclosure of reserve is provided and compared among the selected companies. Statistical analysis is performed to determine whether any differences exist in the extent of disclosure of reserve under the determinant variables. This study shows that some factors would affect the extent of disclosure of reserve quantum in the above-mentioned countries, namely: company’s size, leverage and quality of auditor. Companies that provide reserves quantum in detail appear to display higher size. The findings also show that the level of leverage has affected companies’ reserves quantum disclosure. Indeed, companies that provide detailed reserves quantum disclosure tend to employ a ‘high-quality auditor’. In addition, the study found significant independent variable such as Profit Sharing Contracts (PSC). This factor could explain variations in the level of disclosure of oil reserve quantum between the contractor and host governments. The implementation of SEC oil and gas reporting requirements do not enhance companies’ valuation because the new rules are based only on past and present reserves information (proven reserves); hence, future valuation of oil and gas companies is missing for the market.

Keywords: comparison, company characteristics, disclosure, reserve quantum, regulation

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Authors: Fahad Qureshi

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This paper provides detailed study on the diagnosis of intermittent high vibration spikes at exhaust bearing (Non-Drive End) of Mitsubishi H-25 gas turbine installed in a petrochemical plant in Pakistan. The diagnosis is followed by successful root cause analysis of the issue and recommendations for improving the reliability of machine. Engro Polymer and Chemicals (EPCL), a Chlor Vinyl complex, has a captive power plant consisting of one combined cycle power plant (CCPP), having two gas turbines each having 25 MW capacity (make: Hitachi) and one extraction condensing steam turbine having 15 MW capacity (make: HTC). Besides, one 6.75 MW SGT-200 1S gas turbine (make: Alstom) is also available. In 2018, the organization faced an issue of intermittent high vibration at exhaust bearing of one of H-25 units having tag GT-2101 A, which eventually led to tripping of machine at configured securities. Since the machine had surpassed 64,000 running hours and major inspection was also due, so bearings inspection was performed. Inspection revealed excessive coke deposition at labyrinth where evidence of rotor rub was also present. Bearing clearance was also at upper limit, and slight babbitt (soft metal) chip off was observed at one of its pads so it was preventively replaced. The unit was restated successfully and exhibited no abnormality until October 2020, when these spikes reoccurred, leading to machine trip. Recurrence of the issue within two years indicated that root cause was not properly addressed, so this paper furthers the discussion on in-depth analysis of findings and establishes successful root cause analysis, which captured significant learnings both in terms of machine design deficiencies and gaps in operation & maintenance (O & M) regime. Lastly, revised O& M regime along with set of recommendations are proposed to avoid recurrence.

Keywords: exhaust side bearing, Gas turbine, rubbing, vibration

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Authors: Damien Kunjal, Faeezah Peerbhai

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Despite the increasing popularity of exchange-traded funds (ETFs), ETF investment choices may not always be rational. Excess trading volume, misevaluations of securities, and excess return volatility present in financial markets can be attributed to the influence of the overconfidence bias. Whilst previous research has explored the overconfidence bias in stock markets; this study focuses on trading in ETF markets. Therefore, the objective of this study is to investigate the presence of investor overconfidence in the South African ETF market. Using vector autoregressive models, the lead-lag relationship between market turnover and the market return is examined for the market of South African ETFs tracking domestic benchmarks and for the market of South African ETFs tracking international benchmarks over the period November 2000 till August 2019. Consistent with the overconfidence hypothesis, a positive relationship between current market turnover and lagged market return is found for both markets, even after controlling for market volatility and cross-sectional dispersion. This relationship holds for both market and individual ETF turnover suggesting that investors are overconfident when trading in South African ETFs tracking domestic benchmarks and South African ETFs tracking international benchmarks since trading activity depends on past market returns. Additionally, using the global recession as a structural break, this study finds that investor overconfidence is more pronounced after the global recession suggesting that investors perceive ETFs as risk-reducing assets due to their diversification benefits. Overall, the results of this study indicate that the overconfidence bias has a significant influence on ETF investment choices, therefore, suggesting that the South African ETF market is inefficient since investors’ decisions are based on their biases. As a result, the effect of investor overconfidence can account for the difference between the fair value of ETFs and its current market price. This finding has implications for policymakers whose responsibility is to promote the efficiency of the South African ETF market as well as ETF investors and traders who trade in the South African ETF market.

Keywords: exchange-traded fund, market return, market turnover, overconfidence, trading activity

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Authors: Hans Tjio, Wee Meng Seng

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The interaction of contract and property has always been a concern in corporate and commercial law, where there are internal structures created that may not match the externally perceived image generated by the labels attached to those structures. We will focus, in particular, on the priority structures created by affirmative asset partitioning, which have increasingly come under challenge by those attempting to negotiate around them. The most prominent has been the AT1 bonds issued by Credit Suisse which were wiped out before its equity when the troubled bank was acquired by UBS. However, this should not have come as a surprise to those whose “bonds” had similarly been “redeemed” upon the occurrence of certain reference events in countries like Singapore, Hong Kong and Taiwan during their Minibond crisis linked to US sub-prime defaults. These were derivatives classified as debentures and sold as such. At the same time, we are again witnessing “liabilities” seemingly ranking higher up the balance sheet ladder, finding themselves lowered in events of default. We will examine the mechanisms holders of perpetual securities or preference shares have tried to use to protect themselves. This is happening against a backdrop that sees a rise in the strength of private credit and inter-creditor conflicts. The restructuring regime of the hybrid scheme in Singapore now, while adopting the absolute priority rule in Chapter 11 as the quid pro quo for creditor cramdown, does not apply to shareholders and so exempts them from cramdown. Complicating the picture further, shareholders are not exempted from cramdown in the Dutch scheme, but it adopts a relative priority rule. At the same time, the important UK Supreme Court decision in BTI 2014 LLC v Sequana [2022] UKSC 25 has held that directors’ duties to take account of creditor interests are activated only when a company is almost insolvent. All this has been complicated by digital assets created by businesses. Investors are quite happy to have them classified as property (like a thing) when it comes to their transferability, but then when the issuer defaults to have them seen as a claim on the business (as a choice in action), that puts them at the level of a creditor. But these hidden interests will not show themselves on an issuer’s balance sheet until it is too late to be considered and yet if accepted, may also prevent any meaningful restructuring.

Keywords: asset partitioning, creditor priority, restructuring, BTI v Sequana, digital assets

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Authors: Aishat Abdul-Qadir Zubair

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Background: The absence of Shari’ah screening methodology for companies in Nigeria has further engineered the uncertainty surrounding the acceptability of investing in certain companies by people professing the religion of Islam due to the nature of the activities carried out by these companies. There are some existing shariah screening indices in other jurisdictions whose criteria can be used to check if a company or business is shariah-compliant or not. Examples such as FTSE, DJIM, Standard and Poor to mention just a few. What these indices have tried to do is to ensure that there are benchmarks to check with before investing in companies that carry out mixed activities in their business, wherein some are halal and others may be haram. Purpose: There have been numerous studies on the need to adopt certain screening methodologies as well as call for new methods in screening companies for shariah compliance in order to suit the investments needs of Muslims in other jurisdictions. It is, however, unclear how suitable these methodologies will be to Nigeria. This paper, therefore, seeks to address this gap to consider an appropriate screening methodology to be employed in Nigeria, drawing from the experience of other jurisdictions. Methods: This study employs a triangulation of both quantitative and qualitative methods to analyze the need for Shari’ah screening of companies in Nigeria. The qualitative method is used by way of ijtihad, and this study tries to apply some Islamic Principles of Maqasid al-shari’ah as well as Qawaid al-Fiqiyyah to analyze activities of companies in order to ensure that they are indeed Shari’ah compliant. In addition, using the quantitative data gathered from the interview survey, the perspective of the investors with regards to the need for Shari’ah screening of companies in Nigeria is further analyzed. Results: The result of the study shows that there is a lack of awareness from the teeming Muslim population in Nigeria on the need for Shari’ah screening of companies in Nigeria. The result further shows that there is the need to take into cognizance the peculiar nature of company activities in Nigeria before any particular Shari’ah screening methodology is adopted and setting the necessary benchmarks. Conclusion and Implications: The study concludes that there is the need to ensure that the conscious Muslims in Nigeria screen companies for Shari’ah compliance so that they can easily identify the companies to invest in. The paper, therefore, recommends that the Nigerian government need to come up with a screening methodology that will suit the peculiar nature of companies in Nigeria. The study thus has a direct implication on the Investment regulatory bodies in Nigeria such as the Securities and Exchange Commission (SEC), Central Bank of Nigeria (CBN) as well as the investor Muslims.

Keywords: Shari'ah screening, Muslims, investors, companies

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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: Pavel Porubiak, Lukas Kudlacek

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Introduction Transplant tourism is a controversial method of obtaining an organ, and that goes all the more for a country such as China, where sources of evidence point out to the possibility of organs being harvested illegally. This research aimed at listing the individual countries these tourists come from, or which medical companies sell transplant related products in there, with China being used as an example. Materials and methods The methodology of scoping study was used for both parts of the research. The countries from which transplant tourists come to China were identified by a search through existing medical studies in the NCBI PubMed database, listed under the keyword ‘transplantation in China’. The search was not limited by any other criteria, but only the studies available for free – directly on PubMed or a linked source – were used. Other research studies on this topic were considered as well. The companies were identified through multiple methods. The first was an online search focused on medical companies and their products. The Bloomberg Service, used by stock brokers worldwide, was then used to identify the revenue of these companies in individual countries – if data were available – as well as their business presence in China. A search through the U.S. Securities and Exchange Commission was done in the same way. Also a search on the Chinese internet was done, and to obtain more results, a second online search was done as well. The results and discussion The extensive search has identified 14 countries with transplant tourists to China. The search for a similar studies or reports resulted in finding additional six countries. The companies identified by our research also amounted to 20. Eight of them are sourcing China with organ preservation products – of which one is just trying to enter the Chinese market, six with immunosuppressive drugs, four with transplant diagnostics, one with medical robots which Chinese doctors use for transplantation as well, and another one trying to enter the Chinese market with a consumable-type product also related to transplantation. The conclusion The question of the ethicality of transplant tourism may be very pressing, since as the research shows, just the sheer amount of participating countries, sourcing transplant tourists to another one, amounts to 20. The identified companies are facing risks due to the nature of transplantation business in China, as officially executed prisoners are used as sources, and widely cited pieces of evidence point out to illegal organ harvesting. Similar risks and ethical questions are also relevant to the countries sourcing the transplant tourists to China.

Keywords: China, illegal organ harvesting, transplant tourism, organ harvesting technology

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Authors: Naveen Porika, Snigdho Majumdar, Niraj Sethi

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Water, food and energy securities are emerging as increasingly important and vital issues for India and the world. Hyderabad urban agglomeration (HUA), the capital city of Andhra Pradesh State in India, is the sixth largest city has a population of about 8.2 million. The Musi River, which is a tributary of Krishna river flows from west to east right through the heart of Hyderabad, about 80% of the water used by people is released back as sewage, which flows back into Musi every day with detrimental effects on the environment and people downstream of the city. The average daily sewage generated in Hyderabad city is 950 MLD, however, treatment capacity exists only for 541 Million Liters per Day (MLD) but only 407 MLD of sewage is treated. As a result, 543 MLD of sewage daily flows into Musi river. Hyderabad’s current estimated water demand stands at 320 Million Gallons per Day (MGD). However, its installed capacity is merely 270 MGD; by 2020 estimated demand will grow to 400 MGD. There is huge gap between current supply and demand, and this is likely to widen by 2021. Developing new fresh water sources is a challenge for Hyderabad, as the fresh water sources are few and far from the City (about 150-200 km) and requires excessive pumping. The constraints presented above make the conventional alternatives for supply augmentation unsustainable and unattractive .One such dependable and captive source of easily available water is the treated sewage. With proper treatment, water of desired quality can be recovered from the waste water (sewage) for recycle and reuse. Hyderabad Amberpet sewage treatment of capacity 339 MLD is Asia’s largest sewage treatment plant. Tertiary sewage treatment Standard basic engineering modules of 30 MLD,60 MLD, 120MLD & 180 MLD for sewage treatment plants has been developed which are utilized for developing Sewage Reclamation & Reuse model in Asia’s largest sewage treatment plant. This paper will focus on Hyderabad Water Supply & Demand, Sewage Generation & Treatment, Technical aspects of Tertiary Sewage Treatment and Utilization of developed standard modules for reclamation & reuse of treated sewage to overcome the deficit of 130 MGD as projected by 2021.

Keywords: water reclamation, reuse, Andhra Pradesh, hyderabad, musi river, sewage, demand and supply, recycle, Amberpet, 339 MLD, engineering modules, tertiary treatment

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Authors: Meysam Saidi

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While the specific externalities and required regulatory measures in relation to Islamic banking are fairly uncertain, the business is growing across the world. Unofficial data indicate that the Islamic Finance market is growing with annual rate of 15% and it has reached 1.3 $ trillion size. This trend is associated with inherent systematic connection of Islamic financial institutions to other entities and different sectors of economies. Islamic banking has been subject of market development policies in major economies, most notably the UK. This trend highlights the need for identification of distinct risk features of Islamic banking and crafting customized regulatory measures. So far there has not been a significant systemic crisis in this market which can be attributed to its distinct nature. However, the significant growth and spread of its products worldwide necessitate an in depth study of its nature for customized congruent regulatory measures. In the post financial crisis era some market analysis and reports suggested that the Islamic banks fairly weathered the crisis. As far as heavily blamed conventional financial products such as subprime mortgage backed securities and speculative credit default swaps were concerned the immunity claim can be considered true, as Islamic financial institutions were not directly exposed to such products. Nevertheless, similar to the experience of the conventional banking industry, it can be only a matter of time for Islamic banks to face failures that can be specific to the nature of their business. Using the experience of conventional banking regulations and identifying those peculiarities of Islamic banking that need customized regulatory approach can aid to prevent major failures. Frank Knight has stated that “We perceive the world before we react to it, and we react not to what we perceive, but always to what we infer”. The debate over congruent Islamic banking regulations might not be an exception to Frank Knight’s statement but I will try to base my discussion on concrete evidences. This paper first analyzes both theoretical and actual features of Islamic banking in order to ascertain to its peculiarities in terms of market stability and other externalities. Next, the paper discusses distinct features of Islamic financial transactions and banking which might require customized regulatory measures. Finally, the paper explores how a more transparent path for the Islamic banking regulations can be drawn.

Keywords: Islamic banking, regulation, risks, capital requirements, customer protection, financial stability

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Authors: M. V. Shivaani, P. K. Jain, Surendra S. Yadav

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Public Sector Undertakings (PSUs), being government-owned organizations have commitments for the economic and social wellbeing of the society; this commitment needs to be reflected in their risk-taking, decision-making and governance structures. Therefore, the primary objective of the study is to suggest measures that may lead to improvement in performance of PSUs. To achieve this objective two normative frameworks (one relating to risk levels and other relating to governance structure) are being put forth. The risk index is based on nine risks, such as, solvency risk, liquidity risk, accounting risk, etc. and each of the risks have been scored on a scale of 1 to 5. The governance index is based on eleven variables, such as, board independence, diversity, risk management committee, etc. Each of them are scored on a scale of 1 to five. The sample consists of 39 PSUs that featured in Nifty 500 index and, the study covers a 10 year period from April 1, 2005 to March, 31, 2015. Return on assets (ROA) and return on equity (ROE) have been used as proxies of firm performance. The control variables used in the model include, age of firm, growth rate of firm and size of firm. A dummy variable has also been used to factor in the effects of recession. Given the panel nature of data and possibility of endogeneity, dynamic panel data- generalized method of moments (Diff-GMM) regression has been used. It is worth noting that the corporate governance index is positively related to both ROA and ROE, indicating that with the improvement in governance structure, PSUs tend to perform better. Considering the components of CGI, it may be suggested that (i). PSUs ensure adequate representation of women on Board, (ii). appoint a Chief Risk Officer, and (iii). constitute a risk management committee. The results also indicate that there is a negative association between risk index and returns. These results not only validate the framework used to develop the risk index but also provide a yardstick to PSUs benchmark their risk-taking if they want to maximize their ROA and ROE. While constructing the CGI, certain non-compliances were observed, even in terms of mandatory requirements, such as, proportion of independent directors. Such infringements call for stringent penal provisions and better monitoring of PSUs. Further, if the Securities and Exchange Board of India (SEBI) and Ministry of Corporate Affairs (MCA) bring about such reforms in the PSUs and make mandatory the adherence to the normative frameworks put forth in the study, PSUs may have more effective and efficient decision-making, lower risks and hassle free management; all these ultimately leading to better ROA and ROE.

Keywords: PSU, risk governance, diff-GMM, firm performance, the risk index

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Authors: Edward Shizha

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Citizenship is not only political, but it is also a socio-cultural expectation that naturalized immigrants desire for. However, the outcomes of citizenship desirability are determined by forces outside the individual’s control based on legislation and laws that are designed at the macro and exosystemic levels by politicians and policy makers. These laws are then applied to determine the status (permanency or temporariness) of citizenship for immigrants and refugees, but the same laws do not apply to non-immigrant citizens who attain it by birth. While theoretically, citizenship has generally been considered an irrevocable legal status and the highest and most secure legal status one can hold in a state, it is not inviolate for immigrants. While Article 8 of the United Nations Convention on the Reduction of Statelessness provides grounds for revocation of citizenship obtained by immigrants and refugees in host countries, nation-states have their own laws tied to the convention that provide grounds for revocation. Ever since the 9/11 attacks in the USA, there has been a rise in conditional citizenship and the state’s withdrawal of citizenship through revocation laws that denaturalize citizens who end up not merely losing their citizenship but also the right to reside in the country of immigration. Because immigrants can be perceived as a security threat, the securitization of citizenship and the legislative changes have been adopted to specifically allow greater discretionary power in stripping people of their citizenship.The paper ‘Do We Really Belong Here?’ Transnationalism and the Temporality of Naturalized Citizenship examines literature on the temporality of naturalized citizenship and questions whether citizenship, for newcomers (immigrants and refugees), is a protected human right or a privilege. The paper argues that citizenship in a host country is a well sought-after status by newcomers. The question is whether their citizenship, if granted, has a permanent or temporary status and whether it is treated in the same way as that of non-immigrant citizens. The paper further argues that, despite citizenship having generally been considered an irrevocable status in most Western countries, in practice, if not in law, for immigrants and refugees, citizenship comes with strings attached because of policies and laws that control naturalized citizenship. These laws can be used to denationalize naturalized citizens through revocations for those stigmatized as ‘undesirables’ who are threatened with deportation. Whereas non-immigrant citizens (those who attain it by birth) have absolute right to their citizenship, this is seldom the case for immigrants.This paper takes a multidisciplinary approach using Urie Bronfenbrenner’s ecological systems theory, the macrosystem and exo-system, to examine and review literature on the temporality of naturalized citizenship and questions whether citizenship is a protected right or a privilege for immigrants. The paper challenges the human rights violation of citizenship revocation and argues for equality of treatment for all citizens despite how they acquired their citizenship. The fragility of naturalized citizenship undermines the basic rights and securities that citizenship status can provide to the person as an inclusive practice in a diverse society.

Keywords: citizenship, citizenship revocation, dual citizenship, human rights, naturalization, naturalized citizenship

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Authors: Nasser Alsadoun

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Today's companies in Saudi Arabian capital market must comply with strict criteria and adhere to rigid corporate governance rules and continuous disclosure requirements. Unlike other regulators in the region, decision makers of the Capital Market Authority (hereafter CMA) of Saudi Arabia believes that the announcements of economic sanctions and penalties for non-compliance firms will foster more effective regulatory compliance and hence improve the quality of financial reporting. An implied argument put forward by the opponents, however, states that such penalties are unnecessary and stated to be onerous for non-compliance firms. Over that last years, the CMA has publicly announced several economic fines levied on some listed companies for their failing to comply with corporate governance and continuous disclosure regulation clauses, with the amount of fine levied ranges between 50,000 SR to 100,000 SR for each failing. Economic theory suggests that rational investors make decisions based on a cost-benefit principal. The regulatory intervention made by CMA on the announcement of economic sanctions has been costly to the society (economy) hoping that it improves the transparency of financial statements. It is argued, therefore, that threat of regulators and economic sanctions will provide incentives for firms’ managers to report more relevant and reliable accounting information, and the benefit of such announcements is likely to be reflected in the context of the quality of the financial reports. Yet, the economic consequences of the revealed fines announcement for non-compliance firms in Saudi Arabian market have not been examined. Thus, this study attempts to empirically examine whether market participants are pricing the supposed benefits of rigid governance and disclosure rules in the Saudi market. The study employs an event study methodology to assess the impact of CMA economic sanctions announcements on the market price of non-compliance firms. The study also estimates and examines bid–ask spread behavior of violated firms around the CMA announcements. The findings indicate that the CMA fines announcements for failing to comply with governance and disclosure rules do not appear to play any significant role in securities pricing. In addition, tests of bid-ask behavior does not indicate any significant increases in information asymmetry surrounding these announcements. While the CMA has developed many goals to increase the awareness of listed companies with the best governance and disclosure practices, it seems they have to develop more goals to improve market efficiency and increase investors and public awareness.

Keywords: governance and disclosure violations, financial reporting quality, regulatory intervention, market efficiency

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