Search results for: shareholders

Authors: Helena Susana Afonso Alves, Natália Maria Rafael Canadas, Ana Maria Rodrigues

Abstract:

We examined the impact of governance rules on information asymmetry, using the turnover ratio and the bid-ask spread as proxies for the information asymmetry. We used a SEM model and analyzed the indirect relations through the voluntary disclosure of information and the organizational performance. We built a voluntary disclosure index based on the information firms provided in their annual reports and divided the governance characteristics in two constructs: directors’ and supervisors’ structures and ownership structure. We concluded that the ownership structure exerts a direct influence on share price and share liquidity, Otherwise, the directors’ and supervisors’ structures exert an indirect influence, through the organizational performance and the voluntary disclosure of information. The results also show that for firms with high levels of disclosure the bid-ask spread is lower. However, in firms with a high ownership concentration investors tend to increase the bid-ask spreads and trade less, which, in this case, reduces the liquidity of the stock. The failure to find the relationship between voluntary disclosure of information and the turnover ratio shows us that the liquidity of shares is more related to the greater or lesser concentration of shareholders, with the performance of their companies than with the access to information. Moreover, it is clear that the role that information disclosure plays is mainly at the level of price formation.

Keywords: corporate governance, information asymmetry, voluntary disclosure, structural equation modelling, SEM

Procedia PDF Downloads 488

Authors: Khawla Hlel

Abstract:

Purpose: This study aims to examine whether critical audit matters (CAM) affect financial information quality. We also investigate the moderating role of the audit committee on the association between CAM and financial information quality. Design/Methodology/Approach: The analysis is based on GLS and GMM regressions explaining the absolute value of discretionary accruals by using 52 Tunisian listed firms on the Tunisia Stock Exchange (TSE) for the period 2017-2020. Findings: We find evidence that managers react to the CAM by increasing the quality of financial disclosures. This study provides insights into how a change in the auditor’s report model might impact the quality of financial information. It suggests that external auditors and audit committees serve as a beneficial mechanism for enhancing financial information quality by reducing information asymmetry. In addition, our results indicate that CAM is an efficient monitoring mechanism that increases financial reporting quality and supervises managers. Originality: This study is important for potential investors who should assess CAM when evaluating firms. Furthermore, the authors expect the findings to be interesting to firms, as this study highlights the effectiveness of the auditor in reducing managerial opportunistic behavior and improving information quality. The results could encourage audit regulators to ameliorate the standards, as this research reinforces the role of the auditor in increasing the quality of financial disclosure by offering the required information for shareholders.

Keywords: critical audit matters, audit committee, information quality, Tunisian firms

Procedia PDF Downloads 73

Authors: Simphiwe Phungula

Abstract:

In the past few years, the impact of Covid 19 in South Africa has given rise to the need for business rescue proceedings where businesses are financially distressed. Even more, the looting unrest and floods in certain parts of South Africa have also played an impact on businesses’ financial stress. To help financially distressed companies in South Africa, the Companies Act (“the Act”) has introduced a business rescue procedure aimed at helping those ailing companies. This mechanism is aimed at rehabilitating financially distressed companies so that they become solvent again and if it is not possible, results in a better return for the company’s creditors or shareholders than would result from the immediate liquidation of the company. Unfortunately, since the introduction of business rescue, evidence has shown that sometimes companies resort to business rescue proceedings to seek refuge from creditors even if the facts do not justify that the company should commence business rescue. In most cases, the abuse of business rescue is done by directors who pass a resolution that the company should embark on business rescue even if evidence shows that the company should not commence the proceedings. This is done notwithstanding the principles of King Code IV which requires ethics and good governance on the part of directors. This paper demonstrates how the abuse of business rescue can impact the principles of good governance and ethics of King Code IV. It argues that directors should rethink their corporate practices, and ethical standards when passing a resolution to commence business rescue proceedings.

Keywords: business rescue, king code, corporate governance, ethics

Procedia PDF Downloads 77

Authors: Jamila Garba Audu, Shehu Usman Hassan

Abstract:

The widespread failure in the financial information quality has created the need to improve the financial information quality and to strengthen the control of managers by setting up good firms structures. Published accounting information in financial statements is required to provide various users - shareholders, employees, suppliers, creditors, financial analysts, stockbrokers and government agencies – with timely and reliable information useful for making prudent, effective and efficient decisions. The relationship between corporate governance and performance to financial reporting quality is imperative; this is because despite rapid researches in this area the findings obtained from these studies are constantly inconclusive. Data for the study were extracted from the firms’ annual reports and accounts. After running the OLS regression, a robustness test was conducted for the validity of statistical inferences; the data was empirically tested. A multiple regression was employed to test the model as a technique for data analysis. The results from the analysis revealed a negative association between all the regressors and financial reporting quality except the performance of listed manufacturing firms in Nigeria. This indicates that corporate governance plays a significant role in mitigating earnings management and improving financial reporting quality while performance does not. The study recommended among others that the composition of audit committee should be made in accordance with the provision for code of corporate governance which is not more than six (6) members with at least one (1) financial expert.

Keywords: corporate governance, financial reporting quality, manufacturing firms, Nigeria, performance

Procedia PDF Downloads 227

Authors: Olatokunbo Shoyemi, Mario Brito, Ian Dawson

Abstract:

In recent times, the Nigerian motor insurers have experienced high volume of motor insurance claim pay-outs and insignificant contribution to the net premium income of the Nigerian insurance market, which has been a major concern for the shareholders/stakeholders. It has been argued that there are many factors that have brought about these concerns. However, anecdotal evidence (ongoing debates among industry practitioners) suggests prevalence of fraud due to poor practices in motor insurance business in Nigeria. This study is therefore aimed to carry out an assessment of fraud in motor insurance claims as perceived by experts in the Nigerian insurance market. This study adopted a descriptive research design, and the analysis was built on a survey among insurance experts in Nigeria using a designed questionnaire. A purposive and snowball sampling were used to select our sample (N = 120) - representing a selection of all professionally qualified insurance experts in Nigeria insurance industry. The study found that Nigerian insurance experts (i) largely agree that there is a problematic level of fraud in the Nigerian motor insurance industry; (ii) perceive soft fraud to be about 3 times more common than hard fraud in the Nigerian motor insurance industry, and (iii) strongly agree there are problematic impacts from fraud on the solvency of the Nigerian motor insurers. This paper has provided an empirical understanding of the existence, extent, and impact of fraud risks within the Nigerian insurance market based on expert knowledge and insights rather than, as has often been the case, a reliance on individual anecdotes.

Keywords: claims, net premium income, motor insurance, soft fraud, hard fraud

Procedia PDF Downloads 89

Authors: Tasaduk Musood

Abstract:

In the dynamic landscape of higher education, intra-regional migration within Kashmir represents a complex interplay of influential elements. This qualitative research study aims to explore and analyze the multifaceted factors that significantly shape the patterns and motivations driving students' migration within the region. The study employed a qualitative research approach. The research is carried out with a sample of 60 participants, consisting of 30 male and 30 female students selected from various higher education institutions in the Punjab region. Through self-structured interviews and thematic analysis, the research unravels the underlying drivers, aspirations, challenges, and opportunities that underpin the phenomenon of intra-regional migration in the Kashmiri higher education landscape. The results of this study are expected to offer valuable insights for policymakers, educational institutions, and stakeholders to better understand, address, and potentially enhance the experiences and outcomes of shareholders of students engaged in intra-regional mobility within Kashmir's higher education domain. This study's findings aim to contribute significantly to the existing body of knowledge surrounding intra-regional migration within Kashmir's higher education landscape, offering a nuanced understanding of the drivers behind student mobility. Ultimately, this research endeavors to facilitate more informed and effective decision-making in addressing the evolving dynamics of intra-regional migration in Kashmir's higher education sector.

Keywords: intra-regional migration, student migration patterns, student mobility, higher education, kashmir

Procedia PDF Downloads 58

Authors: Yuanyi (Richard) Fang

Abstract:

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

Procedia PDF Downloads 454

Authors: Mahfoudh Hussein Mgammal

Abstract:

The purpose of this paper is to investigate the moderating and mediating effect of corporate governance mechanisms proxy on the relationship of tax planning measured by effective tax rate components and tax disclosure. This paper tested the hypotheses by a 3-step hierarchical regression with 2010 to 2012 Malaysian-listed nonfinancial firms. We found companies positively value tax-planning activities. This indicates that tax planning is seen as a source of companies' wealth creation as the results show that there is an association between the tax disclosure and the extent of tax planning, and this relationship is highly significant. Examination of the implications of corporate governance mechanisms on the tax disclosure-tax planning association showed the lack of a significant coefficient related to any of the interactive variables. This makes it hard to understand the nature of the association. Finally, we further study the sensitivity of the results, the outcomes were also examined for the robustness and strength of the model specification utilizing OLS-effect estimators and the absence of tax planning related factors (GRTH, LEVE, and CAPNT). The findings of these tests display there is no effect on the tax planning-tax disclosure association. The outcomes of the annual regressions test show that the panel regressions results differ over time because there is a time difference impact on the associations, and the different models are not completely proportionate as a whole. Moreover, our paper lends some support to recent theory on the importance of taxes to corporate governance by demonstrating how the agency costs of tax planning allow certain shareholders to benefit from firm activities at the expense of others.

Keywords: tax disclosure, tax planning, corporate governance, effective tax rate

Procedia PDF Downloads 129

Authors: Arnold Sanda Layuk

Abstract:

Fraud in the disclosure of financial statements by management shows that agency conflict is an important issue in the company. The conflict has consequences for the agency costs that must be borne and has an impact on the firm's performance. The effect of agency costs on firm performance is investigated in this study, as well as whether several variables such as corporate governance mechanisms can positively moderate the agency cost and firm performance relationship. The agency cost is measured by the asset utilization ratio and discretionary expenditure ratio. The firm's performance is represented by the return on equity. Data was collected from the manufacturing companies listed on the Indonesia Stock Exchange from 2015 to 2019, then regressed on the panel data using the panel corrected standard error model (PCSE). According to the findings, agency costs are negatively related to firm performance, which supports previous empirical research findings. It also found that the agency cost and firm performance relationship is significantly moderated by board size and ownership concentration as the representatives of corporate governance mechanisms. It suggests that corporate governance can become tools to reduce agency costs and increase firm performance as well. The empirical evidence adds to previous research on agency conflict, particularly in emerging markets. These findings are expected to supplement previous research and provide additional information to shareholders in order to control opportunistic management decisions that affect their investments and discretionary operational expenses.

Keywords: agency cost, corporate governance, asset utilization ratio, firm performance

Procedia PDF Downloads 174

Authors: Susan P. Teru, Jerome Nyameh

Abstract:

Many contemporary organizations are placing a greater emphasis on business enterprise systems as a means of generating higher levels of economic development and sustainability. Many business research and literature has also concur that enterprise drive economic development, giving little or no credit to social enterprise, whose profit is reinvest to the community development compare to the business enterprise that share their profit to shareholders. Economic development and corporate sustainability includes economic policies that affect the beneficiaries of the economic entity and how it support corporate sustainability as a multifaceted concept that requires organizational change and adaptation on different levels. In this paper, we provide a closer examination of this suggested link between the social enterprise orientation of an organization and the pursuit of corporate sustainability. We suggest that producing social enterprise increments may be best achieved by orienting social enterprise entrepreneurs system to promote economic development and corporate sustainability, which is the new approach to organizational excellent. To this end, we describe a new approach to the social enterprise process that includes social entrepreneur and the key drivers of economic development and corporate sustainability at each stage. We present a model of social enterprise that incorporates the main ideas of the paper and suggests a new perspective for thinking about how to foster and manage social enterprise to achieve high levels of economic development and corporate sustainability as a new ways of achieving organizational excellence. Specifically, we seek to assess (1) what constitutes a corporate sustainability-oriented organization culture, (2) whether it is possible for organizations to display a unified corporate sustainability as a result of social enterprise (3) whether organizations can become more sustainable through social enterprise change.

Keywords: social enterprise orientation, organization, the pursuit of corporate sustainability, business and management

Procedia PDF Downloads 404

Authors: Lubica Hikkerova, Jean-Michel Sahut

Abstract:

Environmental protection remains a global challenge but, since 2012, there has been a progressive decline in corporate engagement in environmental protection issues. This study seeks to investigate the role of financial capacity and governance in improving the level of environmental engagement of companies. The regression technique is applied to data on 351 large European companies from the ASSET4-ESG database for the 2007-2015 period. Firstly, the results show that the companies in the sample are fairly engaged in environmental protection, with a strong dispersion representing nearly four times the average. This means that the companies in the sample do not share the same level of engagement in matters of environmental protection, some being more committed than others. Secondly, the results reveal that the financial capacity of the company, as assessed through its indicators, has a significant effect on its level of environmental protection engagement in the present sample. This effect is more positive the higher the profits the company makes, and more negative the more heavily indebted or, the higher the rates of dividends it pays per share. Lastly, the results also show that a better quality of governance plays an important role in the decision to undertake actions leading to environmental protection. More specifically, the degree of management implication in the running of the business, the respect of the rights of the shareholders, the effectiveness of the control exerted by the board of directors, and, to a lesser extent, the independence of the audit committee, are variables which have a positive and significant influence on the level of environmental engagement of companies.

Keywords: financial capacity, corporate governance, environmental engagement, stakeholder theory, theory of organizational legitimacy, theory of resources and capabilities

Procedia PDF Downloads 169

Authors: Ehsan Ghahramani Aghdam

Abstract:

The policy of dividends has been an interesting topic for a long time in financial literature. There are some studies about the policy of dividends, but a lot of them are in developed markets. It’s possible that there were differences between new and developed markets in some aspects. According to theoretical literature, agency costs and institutional stockholders affect on dividend payout ratio. In this research, free cash flow, collateralizable assets and dispersion of ownership are considered as agency cost factors that cause an interesting contrast between managers-stockholders and stockholders-credit makers. Generally, agency costs for managing the firm by manager or managers are created, and they appear when management is separated from ownership. The purpose of this research is to study the effect of free cash flow, collateralizable assets, dispersion of ownership and institutional stockholders on the dividend payout ratio of accepted firms in the Tehran Stock Exchange. 64 nonfinancial firms in the Tehran Stock Exchange were considered as samples of our experiment for the period of 2017-2022. Correlation and regression tests have been used to identify the relationship of dividend payout ratio with variables of agency costs and institutional stockholders. The results show that free cash flow and institutional stockholders in a positive way and dispersion of ownership in a negative way are related to the dividend payout ratio. But book value and cost of collateralizable assets have no influence on the dividend payout ratio.

Keywords: agency costs, institutional stockholders, free cash flow, dispersion of ownership, collateralizable assets, dividend payout ratio

Procedia PDF Downloads 12

Authors: Rohollah Asadian Kohestani, Nazanin Sedghi

Abstract:

As the number of banks and financial institutions working in Iran has been significantly increased, the attracting and retaining customers and encouraging them to continually use the modern banking services have been important and vital issues. Therefore, there would be a serious competition without a deep perception of consumers and fitness of banking services with their needs in the current economic conditions of Iran. It should be noted that concepts such as 'brand equity' is defined based on the view of consumers; however, it is also focused by shareholders, competitors and other beneficiaries of a firm in addition to bank and its consumers. This study examines the impact of brand equity on the competitive advantage in the banking industry as intensive competition between brands of different banks leads to pay more attention to the brands. This research is based on the Aaker’s model examining the impact of four dimensions of brand equity on the competitive advantage of private banks in Behshahr city. Moreover, conducting an applied research and data analysis has been carried out by a descriptive method. Data collection was done using literature review and questionnaire. A 'simple random' methodology was selected for sampling staff of banks while sampling methodology to select consumers of banks was the distribution of questionnaire between staff and consumers of five private banks including Tejarat, Mellat, Refah K., Ghavamin and, Tose’e Ta’avon banks. Results show that there is a significant relationship between brand equity and their competitive advantage. In this research, software of SPSS 16 and LISREL 8.5, as well as different methods of descriptive inferential statistics for analyzing data and test hypotheses, were employed.

Keywords: brand awareness, brand loyalty, brand equity, competitive advantage

Procedia PDF Downloads 117

Authors: Beatriz dos Anjos Furtado, Marina Barreiros Lamim, Camila Avozani Zago, Julianne Alvim Milward-de-Azevedo, Luís Cláudio Meirelles de Medeiros

Abstract:

The intense process of economic acceleration, expansion of industrial activities and capitalism, combined with population growth, while promoting the development, bring environmental consequences and dynamics of locations. It can be seen that society is seeking to break with old paradigms of capitalist society, seeking to reconcile growth with sustainable development, with a change of mentality of the stakeholders of the production process (shareholders, employees, suppliers, customers, governments, and neighbors, groups citizens and the public in general). In this context, this research aims to map the stakeholders interested in environmental management in industries located in the city of Três Rios/RJ. The city of Três Rios is located in South-Central region of the state of Rio de Janeiro - Brazil. Methodological resources used refer to descriptive and field research, whose nature is qualitative and quantitative. It is also of multicases studies in the study area, and the data collection occurred by means of semi-structured questionnaires and interviews with employees related to the environmental area of the industries located in Três Rios and registered at the Federation of Industries the State of Rio de Janeiro - FIRJAN in the version of 2013 and active in federal revenue. Through this research it observed, among other things, the stakeholders involved in the environmental management process of “Três Rios” industry respondents, and those responding to the demands of environmental management.

Keywords: stakeholders, environmental management, industry, state, customer

Procedia PDF Downloads 466

Authors: jihen ayadi sellami

Abstract:

The rapid evolution of the global financial landscape has led to increased attention to corporate tax policies and the need to understand the factors that influence their tax behavior. In order to mitigate any residual loss for shareholders resulting from tax aggressiveness and resolve the agency problem, appropriate systems that separate the function of management from that of controlling are needed. In this context of growing concerns to limit aggressive corporate taxation practices through governance, this study discusses. Its aims is to examine the influence of six key characteristics of the board of directors (board size, diligence, CEO duality, presence of audit committees, gender diversity and independence of directors), given a governance mechanism, on the tax decisions of non-financial corporations in the United State. In fact, using a sample of 90 non-financial US firms from S&P 500 over a period of 4 years going from 2014 to 2017, the results based on a multivariate linear regression highlight significant associations between these characteristics and corporate tax policy. Notably, larger board, gender diversity, diligence and increased director independence appear to play an important role in reducing aggressive taxation. While duality has a positive and significant correlation with tax aggressiveness, that can be explained by the fact that the manager did properly exploit his specific position within the company. These findings contribute to a deeper understanding of how board characteristics can influence corporate tax management, providing avenues for more effective corporate governance and more responsible tax decision-making

Keywords: tax aggressiveness, board of directors, board size, CEO duality, audit committees, gender diversity, director independence, diligence, corporate governance, united states

Procedia PDF Downloads 40

Authors: Abiodun Oluwaseun Ibude

Abstract:

Every now and then we hear of companies closing down their operations due to unethical practices like an overstatement of company’s balance sheet, concealing company’s debt, embezzlement of company’s fund, declaring false profit and so on. This has led to the liquidation of companies and the loss of investments of shareholders as well as the interest of other stakeholders. As a result of these ugly trends, there is need to put in place a formidable mechanism that will ensure that business activities are conducted in a healthy manner. It should also promote good ethics as well as ensure that the interest of stakeholders and the objectives of any organization is achieved within the confines of the law; wherein law exists to provide criminal penalties for falsification of documents and for conducting other irregularities. Based on the foregoing, it becomes imperative to ensure that steps are taken to stop this menace and face the challenges ahead. This calls for the practice of good governance. The purpose of this study is to identify various components of corporate governance and determine the impact of it on the performance of established organizations. A survey method with the use of questionnaire was applied in collecting data useful for this study which were later analyzed using correlation co-efficiency statistical tools in generating finding, making a conclusion, and necessary recommendation. From the research conducted, it was discovered that there are systems within organizations apart from regulatory agencies that ensure effective control of activities, promote accountability, and operational efficiency. However, some members of organizations fail to explore the usage of corporate governance and impact negatively of an organization’s performance. In conclusion, good corporate governance will not be achieved unless there is openness, honesty, transparency, accountability, and fairness.

Keywords: corporate governance, formidable mechanism, company’s balance sheet, stakeholders

Procedia PDF Downloads 98

Authors: Martha Matashu

Abstract:

This study examined corporate governance and economic growth trends in Sub Saharan African (SSA) countries. The need for corporate governance arise from the fact that the day to day running of the business is done by management who in accordance with the neoclassical theory and agency theory have inborn tendencies to use the resources of the company to their advantage. This prevails against a background where the endogenous economic growth theory hold the assumption that economic growth is an outcome of the overall performance of all companies within an economy. This suggest that corporate governance at firm level determine economic growth through its impact on the overall performance. Nevertheless, insight into literature suggest that efforts to promote corporate governance in countries across SSA since the 1980s to date have not yet yielded desired outcomes. The board responsibilities, shareholder rights, disclosure and transparency, protection of minority shareholder, and liability of directors were thus used as proxies of corporate governance because these are believed to be mechanisms that are believed to enhance company performance their effect on enhancing accountability and transparency. Using panel data techniques, corporate governance and economic growth data for 29 SSA countries from the period of 2008 to 2019 was analysed. The findings revealed declining economic growth trend despite an increase in corporate governance aspects such as director liability, shareholders’ rights, and protection of minority shareholder in SSA countries. These findings are in contradiction to the popularly held theoretical principles of economic growth and corporate governance. The study reached the conclusion thata nonlinearrelationship exists between corporate governance and economic growth within the selectedSSA countries during the period under investigation. This study thus recommends that measures should be taken to create conditions for corporate governance that would bolster significant positive contributions to economic growth in the region.

Keywords: corporate governance, economic growth, sub saharan Africa, agency theory, endogenous theory

Procedia PDF Downloads 127

Authors: Ernest Nweke

Abstract:

This paper examines the changing trend in ownership of Mongolian companies and how this trend has influenced corporate governance mechanisms in Mongolian companies. A study of this magnitude is essential as it x-rays the systematic transformation of Mongolia’s corporate world from the public to private ownership and the tremendous impact it has had on firm governance mechanisms. Owing to Mongolia’s Soviet past, much of the companies in Mongolia were state-owned, state-directed and state-controlled resulting in serious inefficiencies in these companies. This scenario is antithetical to the economic growth and development of any nation as it is grossly at variance with the fundamental principles of good corporate governance that drive prosperity. Consequently, the Mongolian government has in the past decades fine-tuned government policy to prioritize private ownership, establishing various frameworks that will strengthen corporate governance structures in Mongolia. These efforts have paid off and gone a long way in changing the trend in the ownership of companies in Mongolia reversing the old order. The expectation locally and internationally is that companies in post-socialist Mongolia will be more closely aligned to generally accepted corporate governance mechanisms, generally improving company performance and ultimately returns to shareholders. To achieve the research objectives, the survey research method was employed utilizing a sample of seventy randomly selected listed companies representing 22% of Mongolian Stock Exchange listings. Research hypotheses formulated to guide the conduct of the study were tested using Chi-Square analysis, and results show that ownership trend has drastically changed in the post-socialist Mongolia leading to better corporate governance practices in Mongolian companies. This result has important policy implications.

Keywords: corporate disclosure, free market, private ownership, Mongolia

Procedia PDF Downloads 121

Authors: Muhammad Izzam Bin Mohd Khazar, Nur Adibah Binti Zainudin

Abstract:

Islamic banking as one of the financial institutions is highly required to maintain a prudent approach to ensure that any financing given is able to generate income to their respective shareholders. As the default payment of customers is probably occurred in the financing, having a prudent approach in the recovery process is a must to ensure that financing losses are within acceptable limits. The objective of this research is to provide the best practice of recovery which is anticipated to benefit both bank and customers. This study will address arising issue on the current practice of recovery process and followed by providing humanising recovery solutions in the light of the Maqasid Shariah. The study identified main issues pertaining to Islamic recovery process which can be categorized into knowledge crisis, process issues, specific treatment cases and system issues. Knowledge crisis is related to direct parties including judges, solicitors and salesperson, while the recovery process issues include the process of issuance of reminder, foreclosure and repossession of asset. Furthermore, special treatment for particular cases also should be observed since different contracts in Islamic banking products will need different treatment. Finally, issues in the system used in the recovery process are still unresolved since the existing technology is still young in this area to embraced Islamic finance requirements and nature of calculation. In order to humanize the financial services in Islamic banking recovery process, we have highlighted four main recommendation to be implemented by Islamic Financial Institutions namely; 1) early deterrent by improving the awareness, 2) improvement of the internal process, 3) reward mechanism, and 4) creative penalty to provide awareness to all stakeholders.

Keywords: humanizing financial services, Islamic Finance, Maqasid Syariah, recovery process

Procedia PDF Downloads 173

Authors: Laurin Zemmrich, Nicolai Stickler

Abstract:

With the ongoing debate over how to incorporate sustainability, resilience, and value creation into business strategies, many procurement departments are put under pressure by governments, consumers, non-governmental organizations, and other stakeholders to disclose more information about their supply chains. According to practitioners and experts, procurement benefits the supply chain by increasing transparency and accountability, recruiting new suppliers, and supporting sustainable and ethical sourcing strategies. While most procurement departments establish these objectives, the bulk of activities are not carried out or are not regularly monitored. With the full potential of targeted sourcing still to be realized, procurement executives, in particular, are seeking for short-term cost-cutting impacts to appease external shareholders. We overcome this limitation by using an abductive approach to research and integrating empirical data from a Gioia methodology study design with relevant literature. Our analysis demonstrates that the procurement department has six essential levers aligned with sustainability, resilience, and value creation objectives and contributes to developing a new intra- and interorganizational purpose within the supply chain. Three enablers are identified as having a value-creating effect on supply chain interactions. Additionally, we discovered two impacts that alter the power balance between buyers and suppliers during transactions and have a cost-cutting or cost-avoiding effect. While cost-cutting, cost-avoidance, and dependency-reduction impacts are desirable, redistributing power may also have negative consequences. The article establishes a first strategy framework for evaluating the influence of the procurement department on supply chain transactions, allowing managers to understand better and apply the sourcing function inside a supply chain and embed it throughout the business.

Keywords: supply chain management, resilience, sustainability, value creation, purpose

Procedia PDF Downloads 96

Authors: Siti Anis Nadia Abu Bakar, Vani Tanggamani

Abstract:

Over recent years, the quality and environmental management practices are the necessary tasks in hospitality industry in order to provide high quality services, a comfortable and safe environment for occupants as well as innovative nature and shareholders' satisfaction, its environmental and social added value sustainable. Numerous studies have observed and measured quality management program (QMProg) and environmental management practices (EMPrac) independently. This paper analyzed the level of QMProg, and EMPrac in hospitality industry, particularly on hotel performance, specifically in the context of Malaysia as hotel industry in Malaysia has contributed tremendously to the development in the Malaysia tourism industry.The research objectives are; (1) to analyze how the level of QMProg influences on firm performance; (2) to investigate the level of EMPrac and its influence on firm performance. This paper contributes to the literature by providing added-value to the service industry strategic decision-making processes by helping to predict the varying impacts of positive and negative corporate social responsibility (CSR) activities on financial performance in their respective industries. Further, this paper also contributes to develop more applicable CSR strategies. As a matter of fact, the findings of this paper has contributed towards an integrated management system that will assist a firm in implementation of their environmental strategy by creating a higher level of accountability for environmental performance. The best results in environmental systems have instigated managers to explore more options when dealing with problems, especially problems involving the reputation of their hotel. In conclusion, the results of the study infer that the best CSR strategies of the quality and environmental management practices influences hotel performance.

Keywords: corporate social responsibility (CSR), environmental management practices (EMPrac), performance (PERF), quality management program (QMProg)

Procedia PDF Downloads 355

Authors: Seyedmohsen Mortazavi

Abstract:

The purpose of this research is to investigate the personality types of internal auditors on the quality of financial reporting in companies admitted to the Tehran Stock Exchange. Personality type is one of the issues that emphasizes the field of auditors' behavior, and this field has attracted the attention of shareholders and stock companies today, because the auditors' personality can affect the type of financial reporting and its quality. The research is applied in terms of purpose and descriptive and correlational in terms of method, and a researcher-made questionnaire was used to check the research hypotheses. The statistical population of the research is all the auditors, accountants and financial managers of the companies admitted to the Tehran Stock Exchange, and due to their large number and the uncertainty of their exact number, 384 people have been considered as a statistical sample using Morgan's table. The researcher-made questionnaire was approved by experts in the field, and then its validity and reliability were obtained using software. For the validity of the questionnaire, confirmatory factor analysis was first examined, and then using divergent and convergent validity; Fornell-Larker and cross-sectional load test of the validity of the questionnaire were confirmed; Then, the reliability of the questionnaire was examined using Cronbach's alpha and composite reliability, and the results of these two tests showed the appropriate reliability of the questionnaire. After checking the validity and reliability of the research hypotheses, PLS software was used to check the hypotheses. The results of the research showed that the personalities of internal auditors can affect the quality of financial reporting; The personalities investigated in this research include neuroticism, extroversion, flexibility, agreeableness and conscientiousness, all of these personality types can affect the quality of financial reporting.

Keywords: flexibility, quality of financial reporting, agreeableness, conscientiousness

Procedia PDF Downloads 81

Authors: Susan Lanz, Gary T. Burke, Omid Omidvar

Abstract:

The intention to transfer ownership control across family generations is acknowledged to be central to developing a theoretical understanding of how family businesses differ and are distinct as a business group. However, in practice, most business-owning families face challenges to transfer their business ownership from one family generation to the next. To date, researchers have paid little attention to how and when ownership is passed across family generations and what the dynamics of such transitions are. This is primarily due to the prevailing assumption that ownership transfer is an unimportant and legalistic issue that occurs within a wider family management succession process. Yet, the limited evidence available suggests that family ownership transfer occurs inside and outside of the management succession process and is a difficult process for business-owning families to navigate. As a result, many otherwise viable family businesses are closing, leading to unnecessary loss of jobs and knowledge. This qualitative paper examines how family members understand and navigate the ownership transfer process. This study uses an inductive qualitative research design, conducted through in-depth interviews within eight business-owning families. It draws on family development theory and shows how a wide range of family-related events and dynamics outside of family business involvement underlie and shape the ownership transfer process. The findings extend the theory on how these events trigger ownership transfer and how they shape the ownership meanings held within business-owning families. This study found that ownership transfer meanings extend beyond that of transferring the legal control and financial appropriation rights of shareholders. The study concludes there are three different stages in the process of ownership transfer -symbolic, re-balancing, and protectionist. Each stage creates distinct family social constructions of the rights of family members to hold business ownership, and each stage occurs within a specific family development phase.

Keywords: business-owning family, family development theory, ownership transfer, process

Procedia PDF Downloads 132

Authors: Tahar Tayachi, Ahlam Alrehaili

Abstract:

Purpose: The purpose of this paper is to investigate the relationship between the corporate board characteristics and the dividend policy among firms on the Saudi Stock Exchange. Design/Methodology/Approach: This paper uses a sample of 103 nonfinancial firms over a time period of 4 years from 2015 to 2018. To investigate how corporate governance mechanisms such as board independence, the board size, frequency of meetings, and free cash flow impact dividends, the study uses Logit and Tobit models. Findings: This paper finds that board size, board independence, and frequency of board meetings have no influence on a firm’s decision to pay dividends, while board size has a significantly positive impact on the levels of cash dividends paid to investors. This study also finds that the level of free cash flows has a positively significant influence on both the decision to pay dividends and the magnitude of dividend payouts. Research Limitations/Implications: This paper attempts to study the effectiveness of dividend policy among some firms on the Saudi Stock Exchange. Practical Implications: The findings reveal that board characteristics, which represent one of the crucial mechanisms of corporate governance, were found to be complementary to corporate laws and regulations imposed on the Saudi market in 2015. The findings also imply that capital market authorities should revise their corporate regulations and ensure that protection laws are adequate and strong enough to protect the interests of all shareholders. Originality/Value: This paper is among the few studies focusing on dividend policy in Saudi Arabia. Finally, these findings suggest that the improvements in corporate laws in Saudi Arabia led to such an outcome, and it has become prevalent in dividend policy decisions and behaviors of Saudi firms.

Keywords: agency theory, Tobit, corporate governance, dividend payout, Logit

Procedia PDF Downloads 175

Authors: Helene Eller

Abstract:

The aim of non-profit organizations (NPO) is to provide services and goods for its clientele, with profit being a minor objective. By having this definition as the basic purpose of doing business, it is obvious that the goal of an organisation is to serve several bottom lines and not only the financial one. This approach is underpinned by the non-distribution constraint which means that NPO are allowed to make profits to a certain extent, but not to distribute them. The advantage is that there are no single shareholders who might have an interest in the prosperity of the organisation: there is no pie to divide. The gained profits remain within the organisation and will be reinvested in purposeful projects. Good governance is mandatory to support the aim of NPOs. Looking for a measure of good governance the principals of corporate governance (CG) will come in mind. The purpose of CG is direction and control, and in the field of NPO, CG is enlarged to consider the relationship to all important stakeholders who have an impact on the organisation. The recognition of more relevant parties than the shareholder is the link to corporate social responsibility (CSR). It supports a broader view of the bottom line: It is no longer enough to know how profits are used but rather how they are made. Besides, CSR addresses the responsibility of organisations for their impact on society. When transferring the concept of CSR to the non-profit area it will become obvious that CSR with its distinctive features will match the aims of NPOs. As a consequence, NPOs who apply CG apply also CSR to a certain extent. The research is designed as a comprehensive theoretical and empirical analysis. First, the investigation focuses on the theoretical basis of both concepts. Second, the similarities and differences are outlined and as a result the interconnection of both concepts will show up. The contribution of this research is manifold: The interconnection of both concepts when applied to NPOs has not got any attention in science yet. CSR and governance as integrated concept provides a lot of advantages for NPOs compared to for-profit organisations which are in a steady justification to show the impact they might have on the society. NPOs, however, integrate economic and social aspects as starting point. For NPOs CG is not a mere concept of compliance but rather an enhanced concept integrating a lot of aspects of CSR. There is no “either-nor” between the concepts for NPOs.

Keywords: business ethics, corporate governance, corporate social responsibility, non-profit organisations

Procedia PDF Downloads 223

Authors: Lara Al-Haddad, Mark Whittington

Abstract:

This paper aims to examine the impact of two influential internal corporate governance mechanisms, namely board characteristics and ownership structure on the use of real activities-based and accrual-based earnings management by Jordanian public firms. Using panel data from Jordanian public firms after the introduction of the Jordanian Corporate Governance Code (JCGC) in 2009, the study finds both institutional ownership and managerial ownership constrain the use of real and accrual earnings manipulations. On the other side, both independent directors and largest shareholders are found to exaggerate the incidence of using real and accrual earnings management. The study also examines the trade-off between real and accrual earnings management and found that Jordanian firms use a combination of real and accrual-based earnings management to obtain the greatest effect on earnings reporting strategies. For the purpose of this study, three types of real earnings management are considered: sales manipulation, overproduction, and the abnormal reduction of discretionary expenditures. The abnormal discretionary accrual is considered for accruals management. While for the internal corporate governance mechanisms; board characteristics are examined by using board independence, board size, and CEO-duality; and ownership structure is examined by using managerial ownership, institutional ownership, foreign ownership and largest shareholder ownership. To the best knowledge of the researchers, this study is the first to examine the relationship between board characteristics and real earnings management in Jordan. Further, it is the first to examine the relationship between corporate governance mechanisms and discretionary accruals after the introduction of the Jordanian Corporate Governance Code in 2009. Thus, the findings of this study have important policy implications for policymakers, regulators, standard setters, audit professional, and investors in their attempts to constrain the practice of earnings management, whether real or accrual, and to improve the financial reporting quality in Jordan.

Keywords: board characteristics, Jordan, ownership structure, real earnings management

Procedia PDF Downloads 323

Authors: Mohammad Abbas Nejad

Abstract:

Tuka Sabz service production company (private shares), with more than 30 years of history, is considered as one of the first holding companies of Tuka Foulad, which takes steps in the direction of increasing service quality and customer satisfaction. Manpower supply is one of the most important activities of Tuka Sabz company, in addition to car supply services; light and heavy transportation services; management of entertainment, sports, tourism and accommodation centers; design, creation and maintenance services of land space; preparing, cooking, distributing and serving all kinds of personal and ceremonial foods; design, construction, repair and reconstruction of non-industrial buildings; industrial laundry services; public and industrial cleaning services are also among other activities of Tuka Sabz. This company has a high capacity of specialized and committed human resources as the main pillar of its success and spent most of its years of activity in Mobarakeh steel company as one of the reliable contractors in the field of automotive service contracts, green space, industrial cleaning, management cultural, recreational and tourism places, consulting, maintenance and repair of buildings and facilities, industrial laundry, management of cooking centers and personnel transportation. The final result of this article states that Tuka Sabz company is trying to get the satisfaction of three main groups of stakeholders, i.e., employees, customers, and shareholders, for this purpose, by improving the competence and competence of employees, trying to establish a system of meritocracy and respecting the human status of employees. On the one hand, the implementation of quality management and assurance to employers with the timely and favorable implementation of contracts takes a step in this direction.

Keywords: Mubarakeh steel company, Tuka Sabz company, human resources, industrial laundry services

Procedia PDF Downloads 40

Authors: Manaf Bashir

Abstract:

Corporate social responsibility (CSR) has become a tool for corporations to meet the expectations of different stakeholders about economic, social and environmental issues. It has become indispensable for an organization’s success, positive image and reputation. Equally important is how corporations communicate and report their CSR. Employing the stakeholder theory, the purpose of this research is to analyse CSR content of leading Kuwaiti corporations. No research analysis of CSR reporting has been conducted in Kuwait and this study is an attempt to redress in part this empirical deficit in the country and the region. It attempts to identify the issues and stakeholders of the CSR and if corporations are following CSR reporting standards. By analysing websites, annual and CSR reports of the top 100 Kuwaiti corporations, this study found low mentions of the CSR issues and even lower mentions of CSR stakeholders. Environmental issues were among the least mentioned despite an increasing global concern toward the environment. ‘Society’ was mentioned the most as a stakeholder and ‘The Environment’ was among the least mentioned. Cross-tabulations found few significant relationships between type of industry and the CSR issues and stakeholders. Independent sample t-tests found no significant difference between the issues and stakeholders that are mentioned on the websites and the reports. Only two companies from the sample followed reporting standards and both followed the Global Reporting Initiative. Successful corporations would be keen to identify the issues that meet the expectations of different stakeholders and address them through their corporate communication. Kuwaiti corporations did not show this keenness. As the stakeholder theory suggests, extending the spectrum of stakeholders beyond investors can open mutual dialogue and understanding between corporations and various stakeholders. However, Kuwaiti corporations focus on few CSR issues and even fewer CSR stakeholders. Kuwaiti corporations need to pay more attention to CSR and particularly toward environmental issues. They should adopt a strategic approach and allocate specialized personnel such as marketers and public relations practitioners to manage it. The government and non-profit organizations should encourage the private sector in Kuwait to do more CSR and meet the needs and expectations of different stakeholders and not only shareholders. This is in addition to reporting the CSR information professionally because of its benefits to corporate image, reputation, and transparency.

Keywords: corporate social responsibility, environmental responsibility, Kuwait, stakeholder theory

Procedia PDF Downloads 125

Authors: Abdul-Nasser El-Kassar, Walid Elgammal, Hisham Jawhar

Abstract:

This paper studies the determinants of the dividends payout ratio. The factors affecting the dividends payout ratio are to be identified. The study focuses only on the cement and construction industry within the MENA region in an attempt to isolate any incoherent behavior. The factors under consideration are: sales growth, ROE, ROA, ROS, debt to equity ratio, firm size, and free cash flow. Data were collected from official stock exchange markets in addition to annual reports. The study considered all firms that paid dividend in each of the three consecutive years starting from 2010 till 2012. Out of the 123 listed firms that work in cement and construction industry in MENA region, only 19 paid dividends in the three consecutive years 2010-12. Our sample consists of the 19 firms (57 observations) which are selected according to purposive sampling. Moreover, the study uses the homogeneous subcategory within the purposive sampling since only similar firms in the construction industry had been examined. The outcome of the study provides a vital insight into the determinants of dividends payout ratio of companies in MENA region. The results showed that the dividend payout ratio has a strong and positive relationship with return on assets and strong but negative relationship with return on equity. On the other hand, the results detected weak relationships between dividend payout ratio and sale growth, debt to equity ratio, firm size, and free cash flow. The study suggests that board of directors tend to compensate shareholders and minimize the agency cost by distributing a high portion of profits in form of dividends whenever return on equity decreases. Also, when the performance of the firm improves, and hence return on assets increases, boards of directors are more generous in distributing profits.

Keywords: dividends payout ratio, profitability firm size, free cashflow, debt to equity ratio

Procedia PDF Downloads 337

Authors: Murat Can Pehlivanoglu

Abstract:

Historically, gender equality has been mainly defended in the legal arenas of constitutional law and employment law. However, social and economic progress has required corporate law to provide gender equality on corporate boards. Recently, following the trend in Europe, the State of California (United States) enacted a law requiring that every publicly traded corporation based in California should have women on its board of directors. Still, the legal, social and economic implications of this law are yet to be discovered. The contractarian view of corporate law is predominant in the U.S. jurisprudence. However, gender quota law may not be justified through contractarian theory grounds. Therefore, the conformity of gender quota law with the general principles of U.S. corporate law remains questionable, and the immunity of close corporations from the scope of gender quota legislation provides support for the discrepancy. The methodology employed in this paper in the discussion of the rule’s conformity with corporate law is doctrinal, and American case law and legal scholarship are the basis for this discussion. This paper uses the aforementioned California law as sample legislation to evaluate the gender quota laws’ conformity with the contractarian theory of corporate law. It chooses California law as the sample due to its newness and the presence of pending shareholder lawsuits against it. Also, since California is home to global companies, the effect of such law is expected to be wider. As alternative theories laid down by corporate law may already be activated to provide gender equality on boards of publicly traded corporations, enacting a specific gender quota law would not be justified by an allegedly present statutory deficiency based on contractarian theory. However, this theoretical reality would not enable shareholders to succeed in their lawsuits against such law on corporate law grounds, and investors will have limited options against its results. This will eventually harm the integrity of the marketplace. Through the analysis of the contractarian theory of corporate law and California gender quota law, the major finding of this paper is that the contractarian theory of corporate law does not permit mandating board room equality through corporate law. In conclusion, it expresses that the issue should be dealt with through separate legislation with a different remedial structure, to preserve the traditional rationale of corporate law in U.S. law.

Keywords: board of directors, gender equality, gender quota, publicly traded corporations

Procedia PDF Downloads 108