Search results for: wealth and financial independence

Authors: Luisa Unda, Kamran Ahmed, Paul Mather

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We examine the effect of board characteristics on the performance and asset quality of credit unions in Australia, using a large sample covering the period 2004-2012. Credit unions are unique in that they are customer-owned financial institutions and directors are democratically elected by members, which is distinctly different from other financial institutions, such as commercial banks. We find that board remuneration, board expertise, and attendance at board meetings have significantly positive impacts on credit union performance and asset quality, while board members who hold multiple directorships (busy directors), have a significant negative impact on credit union performance. Financial performance also improves with larger boards and long-tenured directors in credit unions. All of these relations hold after we control for alternative measures of performance, credit union characteristics and endogeneity problem.

Keywords: credit unions, corporate governance, board of directors, financial performance, Australia, asset quality

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Authors: Changju Lee, Seungmo Ku, Sondo Kim, Woojin Chang

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How to detecting financial bubble? Addressing this simple question has been the focus of a vast amount of empirical research spanning almost half a century. However, financial bubble is hard to observe and varying over the time; there needs to be more research on this area. In this paper, we used abnormal difference between common stocks price and those preferred stocks price to explain financial bubble. First, we proposed the ‘W-index’ which indicates spread between common stocks and those preferred stocks in stock market. Second, to prove that this ‘W-index’ is valid for measuring financial bubble, we showed that there is an inverse relationship between this ‘W-index’ and S&P500 rate of return. Specifically, our hypothesis is that when ‘W-index’ is comparably higher than other periods, financial bubbles are added up in stock market and vice versa; according to our hypothesis, if investors made long term investments when ‘W-index’ is high, they would have negative rate of return; however, if investors made long term investments when ‘W-index’ is low, they would have positive rate of return. By comparing correlation values and adjusted R-squared values of between W-index and S&P500 return, VIX index and S&P500 return, and TED index and S&P500 return, we showed only W-index has significant relationship between S&P500 rate of return. In addition, we figured out how long investors should hold their investment position regard the effect of financial bubble. Using this W-index, investors could measure financial bubble in the market and invest with low risk.

Keywords: financial bubble detection, future return, forecasting, pairs trading, preferred stocks

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Authors: Pepur Sandra, Bulog Ivana, Rimac Smiljanić Ana

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During the COVID-19 pandemic, stress and family financial fragility arose worldwide. Economic and health uncertainty created new pressure on the everyday life of families. The work from home, homeschooling, and care of other family members caused an increase in unpaid work and generated a new division of intrahousehold. As many times before, women have taken the higher burden. This paper analyzes family stress and finance during the COVID-19 pandemic. We propose that women's inclusion in paid and unpaid work and their financial literacy influence family finances. We build up our assumptions according to the two theories that explain intrahousehold family decision-making: traditional and barging models. The traditional model assumes that partners specialize in their roles in line with time availability. Consequently, partners less engaged in payable working activities will spend more time on domestic activities and vice versa. According to the bargaining model, each individual has their preferences, and the one with more household bargaining power, e.g., higher income, higher level of education, better employment, or higher financial knowledge, is likely to make family decisions and avoid unpaid work. Our results are based on an anonymous and voluntary survey of 869 valid responses from women older than 18 conducted in Croatia at the beginning of 2021. We found that families who experienced delays in settling current obligations before the pandemic were in a worse financial situation during the pandemic. However, all families reported problems settling current obligations during pandemic times regardless of their financial condition before the crisis. Women from families with financial issues reported higher levels of family and personal stress during the pandemic. Furthermore, we provide evidence that more women's unpaid work negatively affects the family's financial fragility during the pandemic. In addition, in families where women have better financial literacy and are more financially independent, families cope better with finance before and during pandemics.

Keywords: family financial fragility, stress, unpaid work, women's financial literacy

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Authors: Sara Ali Alokley, Mansour Saleh Albarrak

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This paper investigates the dependency or clustering of extremes in the financial returns data by estimating the extremal index value θ∈[0,1]. The smaller the value of θ the more clustering we have. Here we apply the method of Ferro and Segers (2003) to estimate the extremal index for a range of threshold values. We compare the dependency structure of extremes in the developed and emerging markets. We use the financial returns of the stock market index in the developed markets of US, UK, France, Germany and Japan and the emerging markets of Brazil, Russia, India, China and Saudi Arabia. We expect that more clustering occurs in the emerging markets. This study will help to understand the dependency structure of the financial returns data.

Keywords: clustring, extremes, returns, dependency, extermal index

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Authors: Ghulam Nabi Naz

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After independence, the popular belief that Gandhian will not indulge in corruption got a setback, post-independence setup paved the way for heavy corruption. The menace which would have dealt with strong legal provisions has become a way of life of Indian society. Corruption is recognized as the single biggest problem facing the country today. It undermines democracy and rule of law, violates human rights, distorts market and corrodes the moral fibre of people. The paper discusses the causes and possible remedial measures of corruption and response of people in Indian society. It emphasizes the factors which provide fertile ground for growth of corruption like, degradation of moral values, absence of a strong anti-corruption law and its effective enforcement, accountability, consistency and a defective system of fighting elections. The paper also highlights the reforms necessary for fighting corruption in India.

Keywords: embezzlement, colonial, licence Raj, good governance, misappropriation, Sangh ideologue, Anna movement

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Authors: Pradip Kumar Das

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India is a developing country and is also one of the most industrialized developing countries of the world. In post-independence period, industry has grown rapidly in India and with industrialization corporate sector in the country has been growing day after day. Nowadays, the investment is not limited to be shareholders alone, apart from the shareholders the common people of the society have also started investing in shares of the corporate sectors. Thus, the responsibilities of the corporate sectors have increased much. Corporate financial reporting refers to a system which provides valuable information to different types of users in the society for taking resourceful decisions with regards to investment policy, organization credit worthiness, profitability, liquidity, provision of taxation etc. The quality of information available to different users fosters the efficient allocation of resources which are very urgent for economic development of a country like India. It is the responsibility of the management of the corporate sector to convey reliable and authentic information with the help of generally accepted accounting principles. Corporate sectors which disclose information through annual reports should be sufficient enough for the purpose of bringing out the salient features relating to business performances and other activities. However, the disclosures practices of the corporate sectors though annual reports have undergone several major changes from time to time. Many a time, these vital changes are in the fashion of presenting information in the annual reports and addition of so many non-statutory disclosures of the company. Very often managements of the corporate sectors are blamed for concealing true picture which is not desirable at all. The corporate financial reporting practice which in the current period has gained a place of prime importance suffers from certain limitations and invites question from the public about its reliability. Thus, the wide gap created by management between the exhibited picture and the real picture sometimes attains to such extent that the purpose of the reporting practice loses its importance. The requirement of full and adequate disclosure of information including information relating to human resources in the annual report in free trade economy of India helps the prospective investors to select the best portfolio of their investments. This paper is a reflection of a modest attempt of the author to highlight the corporate reporting practices followed in India. A cursory glance of the conceptual study shows limitations along with reliability of the reporting practices and suggests measures to overcome the shortcomings of the financial reporting practices.

Keywords: corporate enterprise, cursory glance, portfolio, yawning gap

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Authors: Teguh Sugiarto

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Background: This study aims to explore the fraud that occurred in the financial statements using the Benford distribution law of 1st and 2nd case study of PT AKR Corporindo Tbk. Research Methods: In this study the authors use the first digit of the analysis and the analysis of the second digit of Bedford’s law. Having obtained the results of the analysis of the first and second digits, authors will make the difference between implementations using the scale above and below 5%. The number that has the level of difference in the range of 5% above or below, then a financial report in may, to analyse in the followup to the direction of the audit investigation, and authors assume happens a confusion in the financial statements. Findings: From research done, we found that there was a difference in the results of the appearance of the first digit of the number with the proper use of Benford's law, according to PT AKR Corporindo financial reports Tbk for the fiscal year 2006-2010, above and below the level the difference in set 5%. Conclusions: From the research that has been done, it can be concluded that on PT AKR Corporindo financial report 2006, 2007, 2008, 2009 and 2010, there is a level difference of appearance of numbers according to Benford's law is significant, as presented in the table analysis.

Keywords: Benford law, first digits, second digits, Indonesian company

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Authors: Taha Almarayhe

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This study addresses the gap in understanding the effect of environmental, social, and governance (ESG) practices on firm performance within the Middle East and North Africa (MENA) region. Using a sample of 340 publicly traded firms across ten MENA countries (2007–2017) and employing ordinary least squares (OLS) regression, the study evaluates how ESG ratings impact both accounting-based performance measures—such as return on assets (ROA), return on equity (ROE), and earnings per share (EPS)—and market-based measures like Tobin’s Q and dividend yield. Results reveal that ESG ratings positively and significantly influence financial performance, particularly in countries with strong regulatory environments. This research contributes empirical insights to the literature on ESG’s financial impact, particularly by comparing cross-country data within the MENA region. It provides valuable guidance for investors and managers aiming to enhance financial outcomes through sustainable business practices.

Keywords: ESG ratings, financial performance, MENA countries, environmental disclosures

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Authors: Hong Fan, Lifang Gao, Feng Zhan

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This paper examines the influence of local gambling attitudes on a firm's long-term financial performance. Firms located in gambling-prone regions may be more willing to take risks, thus spending more on innovative projects. However, firms in such regions may also be likely to choose projects impulsively and allocate resources inefficiently. By studying Chinese publicly listed firms from 2010 to 2017, we find that firms in more gambling-prone regions invest more in R&D. Both local gambling attitudes and firms’ R&D spending are positively associated with firms’ long-term financial performance. More importantly, our study reveals that the positive impact of R&D spending on firms’ long-term financial performance is weakened by gambling-friendly attitudes, probably because firms in gambling-prone regions are more likely to overinvest in risky projects. This effect is stronger for larger firms, state-owned enterprises (SOEs), firms with more government subsidies, and firms with weaker internal control.

Keywords: regional gambling attitudes, long-term financial performance, R&D, risk, local bias

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Authors: Taylan Kabbani, Ekrem Duman

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The design of adaptive systems that take advantage of financial markets while reducing the risk can bring more stagnant wealth into the global market. However, most efforts made to generate successful deals in trading financial assets rely on Supervised Learning (SL), which suffered from various limitations. Deep Reinforcement Learning (DRL) offers to solve these drawbacks of SL approaches by combining the financial assets price "prediction" step and the "allocation" step of the portfolio in one unified process to produce fully autonomous systems capable of interacting with its environment to make optimal decisions through trial and error. In this paper, a continuous action space approach is adopted to give the trading agent the ability to gradually adjust the portfolio's positions with each time step (dynamically re-allocate investments), resulting in better agent-environment interaction and faster convergence of the learning process. In addition, the approach supports the managing of a portfolio with several assets instead of a single one. This work represents a novel DRL model to generate profitable trades in the stock market, effectively overcoming the limitations of supervised learning approaches. We formulate the trading problem, or what is referred to as The Agent Environment as Partially observed Markov Decision Process (POMDP) model, considering the constraints imposed by the stock market, such as liquidity and transaction costs. More specifically, we design an environment that simulates the real-world trading process by augmenting the state representation with ten different technical indicators and sentiment analysis of news articles for each stock. We then solve the formulated POMDP problem using the Twin Delayed Deep Deterministic Policy Gradient (TD3) algorithm, which can learn policies in high-dimensional and continuous action spaces like those typically found in the stock market environment. From the point of view of stock market forecasting and the intelligent decision-making mechanism, this paper demonstrates the superiority of deep reinforcement learning in financial markets over other types of machine learning such as supervised learning and proves its credibility and advantages of strategic decision-making.

Keywords: the stock market, deep reinforcement learning, MDP, twin delayed deep deterministic policy gradient, sentiment analysis, technical indicators, autonomous agent

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Authors: Dalia Kubiliūtė

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Lithuania is known as a trusted location for global business institutions, and it attracts investors with it’s competitive environment for financial service providers. Along with the aspiration to offer a strong results-oriented and innovations-driven environment for financial service providers, Lithuanian regulatory authorities consistently implement the European Union's high regulatory standards for financial activities, including sustainability-related disclosures. Since European Union directed its policy towards transition to a climate-neutral, green, competitive, and inclusive economy, additional regulatory requirements for financial market participants are adopted: disclosure of sustainable activities, transparency, prevention of greenwashing, etc. The financial sector is one of the key factors influencing the implementation of sustainability objectives in European Union policies and mitigating the negative effects of climate change –public funds are not enough to make a significant impact on sustainable investments, therefore directing public and private capital to green projects may help to finance the necessary changes. The topic of the study is original and has not yet been widely analyzed in Lithuanian legal discourse. There are used quantitative and qualitative methodologies, logical, systematic, and critical analysis principles; hence the aim of this study is to reveal the problem of the implementation of the regulation on sustainability in the Lithuanian financial sector. Additional regulatory requirements could cause serious changes in financial business operations: additional funds, employees, and time have to be dedicated in order for the companies could implement these regulations. Lack of knowledge and data on how to implement new regulatory requirements towards sustainable reporting causes a lot of uncertainty for financial market participants. And for some companies, it might even be an essential point in terms of business continuity. It is considered that the supervisory authorities should find a balance between financial market needs and legal regulation.

Keywords: financial, legal, regulatory, sustainability

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Authors: Hashim Zameer

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Effective tourism management plays a vital role in promoting sustainability and supporting ecosystems. A common principle that has been in practice over the years is “first pollute and then clean,” indicating countries need financial resources to promote sustainability. Financial development and the tourism management both seems very important to promoting sustainable development. However, without institutional support, it is very difficult to succeed. In this context, it seems prominently significant to explore how institutional quality, tourism development, and financial development could promote sustainable development. In the past, no research explored the role of tourism development in sustainable development. Moreover, the role of financial development, natural resources, and institutional quality in sustainable development is also ignored. In this regard, this paper aims to investigate the role of tourism development, natural resources, financial development, and institutional quality in sustainable development in China. The study used time-series data from 2000–2021 and employed the Bayesian linear regression model because it is suitable for small data sets. The robustness of the findings was checked using a quantile regression approach. The results reveal that an increase in tourism expenditures stimulates the economy, creates jobs, encourages cultural exchange, and supports sustainability initiatives. Moreover, financial development and institution quality have a positive effect on sustainable development. However, reliance on natural resources can result in negative economic, social, and environmental outcomes, highlighting the need for resource diversification and management to reinforce sustainable development. These results highlight the significance of financial development, strong institutions, sustainable tourism, and careful utilization of natural resources for long-term sustainability. The study holds vital insights for policy formulation to promote sustainable tourism.

Keywords: sustainability, tourism development, financial development, institutional quality

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Authors: Igor Perechuda, Wojciech Cieśliński

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The paper identifies the features of Polish sports clubs in the particular organizational forms: profit and nonprofit. Identification and description of these features is carried out in terms of financial efficiency of the given organizational form. Under the terms of the efficiency the research allows you to specify the advantages of particular organizational sports club form and the following limitations. Paper considers features of sports clubs in range of Polish conditions as legal regulations. The sources of the functioning efficiency of sports clubs may lie in the organizational forms in which they operate. Each of the available forms can be considered either a for-profit or nonprofit enterprise. Depending on this classification there are different capabilities of increasing organizational and financial efficiency of a given sports club. Authors start with general classification and difference between for-profit and non-profit sport clubs. Next identifies specific financial and organizational conditions of both organizational form and then show examples of mixed activity forms and their efficiency effect.

Keywords: financial efficiency, for-profit, non-profit, sports club

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Authors: Asma Ammar

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Being different in theory and practice from their conventional counterparts, this research aims to assess the performance of Islamic banks beyond the financial performance by emphasizing their ethical and social identity based on the higher purposes of Islamic law, namely Maqasid al-Shariah. Using Imam al-Ghazali’s theory of Maqasid al-Shariah and Sekaran’s (2000) method, we develop a Maqasid-based index including the five objectives of Shariah (preservation of life, religion, intellect, posterity, and wealth). Our sample covers 9 Islamic banks considered among the largest Islamic banks in the world. For the five years of study (2017-2021), our results reveal that the highest score is performed by Bank Muamalat while the least score is given to Dubai Islamic Bank. The overall Maqasid performance of the sample is unimpressive, indicating that there is a lack of achievement in Maqasid al-Shariah performance of Islamic banks. Consequently, serious measures should be taken by Islamic banks to improve their Maqasid performance and thus contribute effectively to the socio-economic development of the countries in which they operate.

Keywords: Maqasid al-Shariah, Maqasid al-Shariah index, Islamic banks, performance assessment

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Authors: Fawad Azeem

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This paper deals with the comparative analysis of Karachi Electric before and after privatization. Technical as well as financial analysis has been done based on the available KE’s stats for last decade. Karachi Electric has evolved as a better entity in terms of its financial and technical achievements. On the other hand, human resources have been seriously affected due to mass firing of employees from the organizations. Study and analysis show that transparent and unbiased privatization practices on institutions like KE that were in serious trouble can upsurge the standards of the institution. Further, for the betterment of the social circle privatization must not affect the employment opportunities.

Keywords: Karachi Electric, power, energy, privatization

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Authors: Astha Sinha, Anjali Kanagali

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The United Kingdom’s withdrawal from the European Union, also termed as “Brexit,” took place on June 23, 2016 and immediately had global repercussions on the stock markets of the world. It is however expected to have a greater impact on the Banking sector in the UK. There is a two-fold effect on the earnings of banks which is being expected. First is of the trading activity and investment banking businesses being hit due to global weakness in financial markets. Second is that the banks having a large presence in the European Union will have to restructure their operations in order to cover other European countries as well increase their operating costs. As per the analysis, banks are expected to face rate cuts, bad loans, and tight liquidity. The directives in the Brexit negotiations on the Markets in Financial Instruments Directive (MiFID) will be a major decision to be taken for the Banking sector. New regulations will be required since most of the regulations governing the financial services industry allowing for the cross-border transactions were at the EU level. This paper aims to analyze the effect of Brexit on the UK Banking sector and changes in regulations that are expected due to the same. It shall also lay down the lessons learnt from the 2008 financial crisis and draw a parallel in terms of potential areas to be focused on for revival of the financial sector of Britain.

Keywords: Brexit, Brexit impact on UK, impact of Brexit on banking, impact of Brexit on financial services

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Authors: Zairani Zainol, Zulkiflee Daud

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This study employed 86 respondents representing bank officers of Bank XYX (one of the full-fledged Islamic banks in Malaysia) in the northern region of Malaysia to assess the factors that constitute talent in the Islamic financial industries. To test the discriminant factors for talent among bank officers, a factor analysis was performed. The KMO, Bartlett and MSA tests were executed as the prerequisite before performing the factor analysis. The discriminant factors for talent were extracted via eigenvalues and rotated component matrixes. The results show that five factors, namely (1) self-motivation, (2) leadership, (3) teamwork, (4) interpersonal skills, and (5) creativity/innovation constitute talent in the Islamic financial industries. It is hoped that this study could offer guidelines to education providers, specifically those that conduct the Islamic finance and banking program, as to the areas of emphasis for students before graduating. For the Islamic financial institutions, this study is also vital since they could tackle the areas that need to be improved in managing their talents.

Keywords: talent, Islamic financial industries, talent development, bank’s officers

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Authors: Piotr Prewysz-Kwinto

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A dynamic development of financial market is accompanied by the emergence of new products on stock exchanges which give absolutely new possibilities of investing money. Currently, the most innovative financial instruments offered to investors are exchange traded products (ETP). They can be defined as financial instruments whose price depends on the value of the underlying instrument. Thus, they offer investors a possibility of making a profit that results from the change in value of the underlying instrument without having to buy it. Currently, the Warsaw Stock Exchange offers many types of ETPs. They are investment products with full or partial capital protection, products without capital protection as well as leverage products, issued on such underlying instruments as indices, sector indices, commodity indices, prices of energy commodities, precious metals, agricultural produce or prices of shares of domestic and foreign companies. This paper presents the mechanism of functioning of ETP available on the Warsaw Stock Exchange and the results of the analysis of statistical data on these financial instruments.

Keywords: exchange traded products, financial market, investment, stock exchange

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Authors: Natalia Feruleva

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

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

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Authors: Abdul Ganiyu Iddrisu

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

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

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Authors: Joseph Paul Chunga

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

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

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Authors: Hussaini Bala

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There are different opinions in the literature on the relationship between Audit Committee characteristics and earnings management. The mix of opinions makes the direction of their relationship ambiguous. This study investigated the relationship between Audit Committee characteristics and earnings management of listed food and beverages Firms in Nigeria. The study covered the period of six years from 2007 to 2012. 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 dependent variable was generated using two steps regression in order to determine the discretionary accrual of the sample Firms. Multiple regression was employed to run the data of the study using Random Model. The results from the analysis revealed a significant association between audit committee characteristics and earnings management of the Firms. While audit committee size and committees’ financial expertise showed an inverse relationship with earnings management, committee’s independence, and frequency of meetings are positively and significantly related to earnings management. In line with the findings, the study recommended among others that listed food and beverages Firms in Nigeria should strictly comply with the provision of Companies and Allied Matters Act (CAMA) and SEC Code of Corporate Governance on the issues regarding Audit Committees. Regulators such as SEC should increase the minimum number of Audit Committee members with financial expertise and also have a statutory position on the maximum number of Audit Committees meetings, which should not be greater than four meetings in a year as SEC code of corporate governance is silent on this.

Keywords: audit committee, earnings management, listed Food and beverages size, leverage, Nigeria

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Authors: Adel M. Qatawneh

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

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

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

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

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

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Authors: Caroline Foulquier-Expert

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In many states around the world, actions to improve judicial ethics are developing significantly through the production of professional standards for judges. The quest to improve the ethics of judges is legitimate. However, as this development tends to be very important at the moment, some risks it presents must be highlighted. Indeed, if the objective of improving Judges’ Ethics is legitimate, it can also lead to banalization of justice, reinforcement of criticism against the judiciary and to broach incidentally the question of the limits of judgment, which is most perilous for the independence of the judiciary. This research, based on case studies, interviews with judges and an analysis of the literature on this topic (mainly from the United States of America and European Union Member States), tends to draw attention to the fact that the result of the development of these professional standards is that the ethical requirements of judges become ethical requirements of justice, which is an undesirable effect of which we must be aware, in order to prevent it.

Keywords: judicial ethics, codes of conduct, independence, limits of judgment

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Authors: Teguh Sugiarto, Amir Mohamadian Amiri

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

Keywords: Lucas, Fibonacci, Benford, first digit

Procedia PDF Downloads 274

Authors: Irni Rahmayani Johan, Ira Kamelia

Abstract:

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

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

Procedia PDF Downloads 144

Authors: Raif Parlakkaya, Umran Kahraman, Huseyin Cetin

Abstract:

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

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

Procedia PDF Downloads 520

Authors: Philemon Rakoto

Abstract:

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

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

Procedia PDF Downloads 487

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

Abstract:

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

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

Procedia PDF Downloads 240