Search results for: financial management

Authors: Simeon Karafolas, Maciej Woźniak

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Mostly of public financing programs at national and regional level are funded from European Union sources. EU can participate directly to a national and regional program (example LEADER initiative, URBAN…) or indirectly by funding regional or national funds. Funds from European Union are provided from EU multiannual financial framework form which the annual budget is programmed. The adjusted program 2007-2013 of the EU considered commitments of almost 1 trillion Euros for the EU-28 countries. Provisions of the new program 2014-2020 consider commitments of more than 1 trillion Euros. Sustainable growth, divided to Cohesion and Competitiveness for Growth an Employment, is one of the two principal categories; the other is the preservation and management of natural resources. Through this financing process SMEs benefited of EU and public sources by receiving grants for their investments. Most of the financial instruments are available indirectly through the national financial intermediaries. Part of them is managed by the European Investment Fund. The paper focuses on the public financing to SMEs by examining case studies on divers forms of public help. It tries to distinguish the efficiency of the examined good practices and therefore try to have some conclusions on the possibility of application to other regions.

Keywords: DIFASS, grants, SMEs, public financing

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Authors: Ghadeer A.Al-Jabaree, Husam Aldeen Al-Khadash, M. Nassar

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This study aimed at investigating the effect of well-designed corporate governance system on the financial stability of insurance companies listed in ASE. Further, this study provides a comprehensive model for evaluating and analyzing insurance companies' financial position and prospective for comparing the degree of corporate governance application provisions among Jordanian insurance companies. In order to achieve the goals of the study, a whole population that consist of (27) listed insurance companies was introduced through the variables of (board of director, audit committee, internal and external auditor, board and management ownership and block holder's identities). Statistical methods were used with alternative techniques by (SPSS); where descriptive statistical techniques such as means, standard deviations were used to describe the variables, while (F) test and ANOVA analysis of variance were used to test the hypotheses of the study. The study revealed the existence of significant effect of corporate governance variables except local companies that are not listed in ASE on financial stability within control variables especially debt ratio (leverage),where it's also showed that concentration in motor third party doesn't have significant effect on insurance companies' financial stability during study period. Moreover, the study concludes that Global financial crisis affect the investment side of insurance companies with insignificant effect on the technical side. Finally, some recommendations were presented such as enhancing the laws and regulation that help the appropriate application of corporate governance, and work on activating the transparency in the disclosures of the financial statements and focusing on supporting the technical provisions for the companies, rather than focusing only on profit side.

Keywords: corporate governance, financial stability and solvency margin, insurance companies, Jordan

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Authors: Shama Urooj

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The present work investigates the relationship among financial inclusion, modernization, and energy performance in SCO member countries during the years 2011–2021. PCA is used to create composite indexes of financial inclusion, modernization, and energy performance. We used panel regression models that are both reliable and heteroscedasticity-consistent to look at the relationship among variables. The findings indicate that financial inclusion (FI) and modernization, along with the increased FDI, all appear to contribute to the energy performance in the SCO member countries. However, per capita GDP has a negative impact on energy performance. These results are unbiased and consistent with the robust results obtained by applying different econometric models. Feasible Generalized Least Square (FGLS) estimation is also used for checking the uniformity of the main model results. This research work concludes that there has been no policy coherence in SCO member countries regarding the coordination of growing financial inclusion and modernization for energy sustainability in recent years. In order to improve energy performance with modern development, policies regarding financial inclusion and modernization need be integrated both at national as well as international levels.

Keywords: financial inclusion, energy performance, modernization, technological development, SCO.

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Authors: T. Miková

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This paper analyzes the effect of a single uniform accounting rule on reporting quality by investigating the influence of IFRS on earnings management. This paper examines whether earnings management is reduced after IFRS adoption through the use of “loss avoidance thresholds”, a method that has been verified in earlier studies. This paper concentrates on two European countries: one that represents the continental code law tradition with weak protection of investors (France) and one that represents the Anglo-American common law tradition, which typically implies a strong enforcement system (the United Kingdom). The research investigates a sample of 526 companies (6822 firm-year observations) during the years 2000 – 2013. The results are different for the two jurisdictions. This study demonstrates that a single set of accounting standards contributes to better reporting quality and reduces the pervasiveness of earnings management in France. In contrast, there is no evidence that a reduction in earnings management followed the implementation of IFRS in the United Kingdom. Due to the fact that IFRS benefit France but not the United Kingdom, other political and economic factors, such legal system or capital market strength, must play a significant role in influencing the comparability and transparency cross-border companies’ financial statements. Overall, the result suggests that IFRS moderately contribute to the accounting quality of reported financial statements and bring benefit for stakeholders, though the role played by other economic factors cannot be discounted.

Keywords: accounting standards, earnings management, international financial reporting standards, loss avoidance, reporting quality

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Authors: Abdous Noureddine

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The problem of funding in Algeria emerged as a problem you need to study after many Algerians researchers pointed out that the faltering Algerian public economic institution due to the imbalance in the financial structures and lower steering and marketing efficiency, as well as a result of severe expansion of borrowing because of inadequate own resources, and the consequent inability This institution to repay loans and interest payments, in addition to increasing reliance on overdraft so used to finance fixed assets, no doubt that this deterioration requires research and study of the causes and aspects of treatment, which addresses the current study, aside from it.

Keywords: financial structure, financial capital, equity, debt, firm’s value, return, leverage

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Authors: C. F. Popoola, K. Akinsanya, S. B. Babarinde, D. A. Farinde

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This study investigated published financial statement as correlate of investment decision among commercial bank stakeholders in Nigeria. A correlation research design was used in the study. 180 users of published financial statement were purposively sampled from Lagos and Ibadan. Data generated were analyzed using Pearson correlation and regression. The findings of the study revealed that, balance sheet is negatively related with investment decision (r=-.483; p < .01) while income statement (r= .249; p < .001), notes on the account (r= .230; p < .001), cash flow statement (r= .202; p < .001), value added statement (r= .328; p < .001) and five-year financial summary (r= .191 ;p < .01) are positively related with investment decision. Findings also revealed that components of published financial statement significantly predicted good investment decision (R2= .983; F(5,175)=284.5; p < .05) for commercial bank stakeholders. Therefore, it was suggested that Nigeria banks and professional bodies should instigate programs that will increase the knowledge of stakeholders on published financial statement.

Keywords: commercial banks, financial statement, income statement, investment decision, stakeholders

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Authors: Ivana Tadic, Snjezana Pivac

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Although human resources are recognized as the crucial companies’ resources and their positive influence on companies’ performances has been confirmed through different researches, scientists are still debating it. In order to contribute this debate, this paper firstly discusses the most important human resource management elements and practices and its influence on companies’ success. Afterwards it defines human resource “bundles” – interrelated and internally consistent human resource practices, complementary to each other, or the most important human resource practices and elements regarding Croatian companies and its human resource management activities. Finally, the paper provides empirical results; more precisely it reveals the relation of the level of development of human resource management function (“bundles”) and companies’ financial performances (using profitability ratios, liquidity ratios, solvency ratios and a group of additional ratios related to employees’ indicators).

Keywords: companies’ performances, human resource bundles, multivariate statistical analysis, marketing

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Authors: Rodrigo Zeidan

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The paper identifies failures of decision making and corporate governance that allow non-financial companies around the world to develop hedging strategies that lead to hefty losses in the aftermath of the financial crisis. The sample is comprised of 346 companies from 10 international markets, of which 49 companies (and a subsample of 13 distressed companies) lose a combined US$18.9 billion. An event study shows that most companies that present losses in derivatives experience negative abnormal returns, including a number of companies in which the effect is persistent after a year. The results of a probit model indicate that the lack of a formal hedging policy, no monitoring to the CFOs, and considerations of hubris and remuneration contribute to the mismanagement of hedging policies.

Keywords: risk management, hedging, derivatives, monitoring, corporate governance structure, event study, hubris

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Authors: Yosia Mulumba, Klaus Schmidt

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Financial Inclusion is considered a key pillar for development in most countries around the world. Access to affordable financial services in a country’s economy can be a driver to overcome poverty and reduce income inequalities, and thus increase economic growth. Nevertheless, the number of financially excluded populations in developing countries continues to be very high. This paper explores the role of Financial Technology (Fintech) as a key driver for achieving financial inclusion in developing countries post the COVID-19 pandemic with an emphasis on four East African countries: Kenya, Tanzania, Uganda, and Rwanda. The research paper is inspired by the positive disruption caused by the pandemic, which has compelled societies in East Africa to adapt and embrace the use of financial technology innovations, specifically Mobile Money Services (MMS), to access financial services. MMS has been further migrated and integrated with other financial technology innovations such as Mobile Banking, Micro Savings, and Loans, and Insurance, to mention but a few. These innovations have been adopted across key sectors such as commerce, health care, or agriculture. The research paper will highlight the Mobile Network Operators (MNOs) that are behind MMS, along with numerous innovative products and services being offered to the customers. It will also highlight the regulatory framework under which these innovations are being governed to ensure the safety of the customers' funds.

Keywords: financial inclusion, financial technology, regulatory framework, mobile money services

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Authors: Zidane Abderrezzaq

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In contrast to recent successful developments in macro monetary policies, the modelling, measurement and management of systemic financial stability has remained problematical. Indeed, the focus of most effort has been on improving individual, rather than systemic, bank risk management; the Basel II objective has been to bring regulatory bank capital into line with the (sophisticated) banks’ assessment of their own economic capital. Even at the individual bank level there are concerns over appropriate diversification allowances, differing objectives of banks and regulators, the need for a buffer over regulatory minima, and the distinction between expected and unexpected losses (EL and UL). At the systemic level the quite complex and prescriptive content of Basel II raises dangers of ‘endogenous risk’ and procyclicality. Simulations suggest that this latter could be a serious problem. In an extension to the main analysis we study how liquidity effects interact with banking structure to produce a greater chance of systemic breakdown. We finally consider how the risk of contagion might depend on the degree of asymmetry (tiering) inherent in the structure of the banking system. A number of our results have important implications for public policy, which this paper also draws out.

Keywords: systemic stability, financial regulation, credit risk, systemic risk

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Authors: Laura Sour

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Government accounting is an essential instrument of transparency and accountability in public administration, which allows connecting internal management with the implementation of policies and their evaluation by third parties through the construction of indicators on the cost of government. Several countries have adopted the International Public Sector Accounting Standards (IPSAS) as part of their modernization strategy. This document will evaluate the quantity and harmonization of the financial information published in the financial statements of 12 Latin American countries based on what is established in IPSAS 1, 2 and 17. For this, seven types of financial statements are analyzed. published during the period from 2015 to 2019. Based on this information, it will be possible to describe the evolution in the government financial publication to carry out a detailed analysis of the items that have been most transparent in these countries. Finally, the level of harmonization of the financial statements will be studied using the Herfindahl-Hirschman index (IHH) to determine the degree of comparability of the information. To date, the results indicate that the public sector has increased the quantity and harmonization of the financial information published during the study period, but in a heterogeneous way: From the data collected, it has been found that the financial statement published with greater frequency and quantity is the Income Statement (classification of expenses by nature). On the other hand, the most complete reports were published by Costa Rica (2017 to 2019) and Mexico (2016 to 2018), periods during which these countries complied with 92.9 percent of the items analyzed. Although 2017 and 2018 are the years in which the most financial statements were reported, it is important to mention that Mexico is the country that has published the most financial information throughout the entire study period. The use of the IHH is expected to provide accurate information on the quality with which countries have adopted IPSAS within their government accounting systems to promote transparency and accountability in the continent.

Keywords: accounting and auditing, government policy and regulation, harmonization, public sector accounting and audits IPSAS

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Authors: Maha Hammami, Olfa Benouda Sioud

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This study investigates the reliability of management earnings forecasts with reference to these two ingredients: verifiability and neutrality. Specifically, we examine the biasedness (or accuracy) of management earnings forecasts and company specific characteristics that can be associated with accuracy. Based on sample of 102 IPO prospectuses published for admission on NYSE Euronext Paris from 2002 to 2010, we found that these forecasts are on average optimistic and two of the five test variables, earnings variability and financial leverage are significant in explaining ex post bias. Acknowledging the possibility that the bias is the result of the managers’ forecasting behavior, we then examine whether managers decide to under-predict, over-predict or forecast accurately for self-serving purposes. Explicitly, we examine the role of financial distress, operating performance, ownership by insiders and the economy state in influencing managers’ forecasting preferences. We find that managers of distressed firms seem to over-predict future earnings. We also find that when managers are given more stock options, they tend to under-predict future earnings. Finally, we conclude that the management earnings forecasts are affected by an intentional bias due to managers’ forecasting preferences.

Keywords: intentional bias, management earnings forecasts, neutrality, verifiability

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Authors: Helena Costa Oliveira, Carmem Oliveira, Rita Moutinho

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The Balanced Scorecard (BSC) is a continuous strategic monitoring model focused not only on financial issues but also on internal processes, patients/users, and learning and growth. Initially dedicated to business management, it currently serves organizations of other natures - such as hospitals. This paper presents a BSC designed for a Portuguese Acute Pain Unit (APU). This study is qualitative and based on the experience of collaborators at the APU. The management of APU is based on four perspectives – users, internal processes, learning and growth, and financial and legal. For each perspective, there were identified strategic objectives, critical factors, lead indicators and initiatives. The strategic map of the APU outlining sustained strategic relations among strategic objectives. This study contributes to the development of research in the health management area as it explores how organizational insufficiencies and inconsistencies in this particular case can be addressed, through the identification of critical factors, to clearly establish core outcomes and initiatives to set up.

Keywords: acute pain unit, balanced scorecard, hospital management, organizational performance, Portugal

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Authors: Torben Hansen

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While trust has long been regarded as one of the most critical variables for developing and maintaining well-functioning financial customer-seller relationships it can be suggested that trust not only relates to customer trust in individual companies (narrow-scope trust). Trust also relates to the broader business context in which consumers may carry out their financial behaviour (broad-scope trust). However, despite the well-recognized significance of trust in marketing research, only few studies have investigated the role of broad-scope trust in consumer financial behaviour. Moreover, as one of its many serious outcomes, the global financial crisis has elevated the need for an improved understanding of the role of broad-scope trust in consumer financial services markets. Only a minority of US and European consumers are currently confident in financial companies and ‘financial stability’ and ‘trust’ are now among the top reasons for choosing a bank. This research seeks to address this shortcoming in the marketing literature by investigating direct and moderating effects of broad-scope trust on consumer financial behaviour. Specifically, we take an ability-effort approach to consumer financial behaviour. The ability-effort approach holds the basic premise that the quality of consumer actions is influenced by ability factors, for example consumer knowledge and cognitive effort. Our study is based on two surveys. Survey 1 comprises 1,155 bank consumers, whereas survey 2 comprises 764 pension consumers. The results indicate that broad-scope trust negatively moderates relationships between knowledge and financial healthiness and between cognitive effort and financial healthiness. In addition, it is demonstrated that broad-scope trust negatively influences cognitive effort. Specifically, the results suggest that broad-scope trust contributes to the financial well-being of consumers with limited financial knowledge and processing capabilities. Since financial companies are dependent on customers to pay their loans and bills they have a greater interest in developing relations with consumers with a healthy financial behaviour than with the opposite. Hence, financial managers should be engaged with monitoring and influencing broad-scope trust. To conclude, by taking into account the contextual effect of broad-scope trust, the present study adds to our understanding of knowledge-effort-behaviour relationship in consumer financial markets.

Keywords: cognitive effort, customer-seller relationships, financial healthiness, knowledge, trust

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Authors: Saima Akbar

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The global financial crisis severely and adversely impacted the Pakistanis’ financial setups with far-reaching consequences for its victims. This study aimed to analyze the various determinants of the banks’ financial performance in Pakistan. The stepwise multiple regression analysis and pre-post analysis were carried out in this regard by using SPSS ver 22. The study found that the assets quality is the most influential determinant of return over assets followed by bank size and solvency. Advances, liquidity, investments, and size have positive while poor assets quality and deposits have a negative impact on the return over assets. The comparison of the pre-crisis and post-crisis coefficient values of the independent variables revealed that the global financial crisis had exerted a significant impact on the relative ability of the financial performance determinants to explain variations in return over assets.

Keywords: pre-crisis, post-crisis, coefficient values, determinants

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Authors: Nomakhosi Tshuma, Carley Chetty

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This study employed panel regression analysis to investigate the financial performance determinants of MTN and Vodacom’s rest of Africa businesses between 2012 to 2020. It used net profit margin, return on assets (ROA), and return on equity (ROE) as financial performance proxies. Financial performance determinants investigated were asset size, debt ratio, liquidity, number of subscribers, and exchange rate. Data relating to exchange rates were obtained from the World Bank website, while financial data and subscriber information were obtained from the companies’ audited financial statements. The study found statistically significant negative relationships between debt and both ROA and net profit, exchange rate and both ROA and net profit, and subscribers and ROE. It also found significant positive relationships between ROE and both asset size and exchange rate. The study recommends strategic options that optimise on the above findings, and these include infrastructure sharing to reduce infrastructure costs and the minimisation of foreign-denominated debt.

Keywords: financial performance, determinants of financial performance, business in Africa, telecommunications industry

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Authors: Narvada Ramdhany, Reena Bhattu Babajee

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The 2007-2008 Global Financial Crisis which initiated in the US had a global outreach, impacting the financial and banking sectors of several economies; such as European countries, developing and emerging countries in Asia, Latin America and Africa. European countries represent one of the main sources of export earnings for Mauritius and given that Europe has been quite profoundly affected by the crisis, the Mauritian economy also could have been negatively affected. This study is being undertaken to see if the crisis had a spill-over effect on the Mauritian banking system. It will also enable to determine if the measures put in place to counteract the crisis by regulatory authorities have been effective. The study will be carried out on 17 banks and data will be collected over a time frame of seven years; with a pre-crisis period from 2005 to 2007 and a post-crisis period from 2009 to 2011. The impact of the crisis as such will be measured through the financial performance of the banks, using financial ratios and regression analysis. The results show that during the period concerned Mauritian banks have remained solvent and relatively stable. One of the main explanations put forward to explain the resilience of the banking sector to the crisis is that foreign exposure was relatively low. Another explanation put forward is that Mauritian banks normally transact mainly with prime borrowers unlike most the banks which were affected by the financial crisis.  

Keywords: global financial crisis, banking sector, financial performance, Mauritian banks

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Authors: Mohamed Aljarallah, Mohamed Nurullah, George Saridakis

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This paper aims and objectives are to investigate how the structural change of the financial regulatory bodies affect the financial supervision and how the regulators can design such a structure with taking into account; the Central Bank, the conduct of business and the prudential regulators, it will also consider looking at the structure of the international regulatory bodies and what barriers are found. There will be five questions to be answered; should conduct of business and prudential regulation be separated? Should the financial supervision and financial stability be separated? Should the financial supervision be under the Central Bank? To what extent the politician should intervene in changing the regulatory and supervisory structure? What should be the regulatory and supervisory structure when there is financial conglomerate? Semi structure interview design will be applied. This research sample selection contains a collective of financial regulators and supervisors from the emerged and emerging countries. Moreover, financial regulators and supervisors must be at a senior level at their organisations. Additionally, senior financial regulators and supervisors would come from different authorities and from around the world. For instance, one of the participants comes from the International Bank Settlements, others come from European Central Bank, and an additional one will come from Hong Kong Monetary Authority and others. Such a variety aims to fulfil the aims and objectives of the research and cover the research questions. The analysis process starts with transcription of the interview, using Nvivo software for coding, applying thematic interview to generate the main themes. The major findings of the study are as follow. First, organisational structure changes quite frequently if the mandates are not clear. Second, measuring structural change is difficult, which makes the whole process unclear. Third, effective coordination and communication are what regulators looking for when they change the structure and that requires; openness, trust, and incentive. In addition to that, issues appear during the event of crisis tend to be the reason why the structure change. Also, the development of the market sometime causes a change in the regulatory structure. And, some structural change occurs simply because of the international trend, fashion, or other countries' experiences. Furthermore, when the top management change the structure tends to change. Moreover, the structure change due to the political change, or politicians try to show they are doing something. Finally, fear of being blamed can be a driver of structural change. In conclusion, this research aims to provide an insight from the senior regulators and supervisors from fifty different countries to have a clear understanding of why the regulatory structure keeps changing from time to time through a qualitative approach, namely, semi-structure interview.

Keywords: financial regulation bodies, financial regulatory structure, global financial regulation, financial crisis

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Authors: Alireza Naserpoor

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Derivatives are the most important innovation which has happened in the past decades. When it comes to financial markets, it has changed the whole way of operations of stock, commodities and currency market. Beside a lot of advantages, Conventional derivatives contracts have some disadvantages too. Some problems have been caused by derivatives contain raising Volatility, increasing Bankruptcies and causing financial crises. Standard Parallel Salam contract as an Islamic financial product meanwhile is a financing instrument can be used for risk management by investors. Standard Parallel Salam is a Shari’ah-Compliant contract. Furthermore, it is an alternative to conventional derivatives. Despite the fact that the unstructured types of that, has been used in several Islamic countries, This contract as a structured and standard financial instrument introduced in Iran Mercantile Exchange in 2014. In this paper after introducing parallel Salam, we intend to examine a collection of international experience and local measure regarding launching standard parallel Salam contract and proceed to describe standard scenarios for trading this instrument and practical experience in Iran Mercantile Exchange about this instrument. Afterwards, we make a comparison between SPS and Futures contracts as a conventional derivative. Standard parallel salam contract as an Islamic financial product, can be used for risk management by investors. SPS is a Shariah-Compliant contract. Furthermore it is an alternative to conventional derivatives. This contract as a structured and standard financial instrument introduced in Iran Mercantile Exchange in 2014. despite the fact that the unstructured types of that, has been used in several Islamic countries. In this article after introducing parallel salam, we intend to examine a collection of international experience and local measure regarding launching standard parallel salam contract and proceed to describe standard scenarios for trading this instrument containing two main approaches in SPS using, And practical experience in IME about this instrument Afterwards, a comparison between SPS and Futures contracts as a conventional derivatives.

Keywords: futures contracts, hedging, shari’ah compliant instruments, standard parallel salam

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Authors: Christoph Schuler, Oriana Ponta

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Public Financial Management (PFM) reforms are promoted by various international organizations such as the International Monetary Fund (IMF) or the World Bank, local development banks and the donor country community to strengthen governance and accountability in developing countries across the world. Reform efforts undertaken are often systematically measured against international best practice by the application of standardized analytical instruments such as the Public Expenditure and Financial Accountability Framework (PEFA) or the Poverty Reduction Action Plan (PARP). While those instruments analyze direct achievements of PFM reforms, the long-term benefits of such reforms for society remain untapped. This gives rise to the question why the concept of impact evaluation with its experimental or quasi-experimental settings in the form of randomized control trials has rarely been applied in the context of PFM reforms. To close this gap, this study provides examples where the concept of impact evaluation can be applied to PFM reforms and thereby shifting the focus from outcome towards a long-term impact. As it is a new approach, this study does not attempt to conduct a fully flagged impact evaluation of a certain PFM reform. However, it will outline, as a form of pre-test the applicability of the impact evaluation methodology in this context, for example, by more closely analyzing the commonly used indicators (for example within PEFA or PARP). This would mean to scrutinize these indicators as to how they were designed and how they are related to the long-term impact, they should be producing. The analysis of PFM reform indicators and their relation to long-term impacts should provide practitioners and scholars alike with new insights on how to strengthen the accountability of public service delivery through successful and sustainable PFM reforms.

Keywords: accountability, impact evaluation, PFM reforms, public financial management

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Authors: Yuzhi Cai

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In this paper, we introduce a newly developed quantile function model that can be used for estimating conditional distributions of financial returns and for obtaining multi-step ahead out-of-sample predictive distributions of financial returns. Since we forecast the whole conditional distributions, any predictive quantity of interest about the future financial returns can be obtained simply as a by-product of the method. We also show an application of the model to the daily closing prices of Dow Jones Industrial Average (DJIA) series over the period from 2 January 2004 - 8 October 2010. We obtained the predictive distributions up to 15 days ahead for the DJIA returns, which were further compared with the actually observed returns and those predicted from an AR-GARCH model. The results show that the new model can capture the main features of financial returns and provide a better fitted model together with improved mean forecasts compared with conventional methods. We hope this talk will help audience to see that this new model has the potential to be very useful in practice.

Keywords: DJIA, financial returns, predictive distribution, quantile function model

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Authors: Kwadwo Yeboah

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Background and Aims: The adoption of International Accounting Standards (IAS) is considered to be one of the most significant developments in the accounting profession. The adoption of IAS aims to improve financial reporting quality by ensuring that financial information is transparent and comparable across borders. However, there is a lack of research on the impact of IAS on financial reporting quality in emerging economies. This study aims to fill this gap by evaluating the impact of IAS on financial reporting quality in emerging economies. Methods: This study uses a sample of firms from emerging economies that have adopted IAS. The sample includes firms from different sectors and industries. The financial reporting quality of these firms is measured using financial ratios, such as earnings quality, financial leverage, and liquidity. The data is analyzed using a regression model that controls for firm-specific factors, such as size and profitability. Results: The results show that the adoption of IAS has a positive impact on financial reporting quality in emerging economies. Specifically, firms that adopt IAS exhibit higher earnings quality and lower financial leverage compared to firms that do not adopt IAS. Additionally, the adoption of IAS has a positive impact on liquidity, suggesting that firms that adopt IAS have better access to financing. Conclusions: The findings of this study suggest that the adoption of IAS has a positive impact on financial reporting quality in emerging economies. The results indicate that IAS adoption can improve transparency and comparability of financial information, which can enhance the ability of investors to make informed investment decisions. The study contributes to the literature by providing evidence of the impact of IAS adoption in emerging economies. The findings of this study have implications for policymakers and regulators in emerging economies, as they can use this evidence to support the adoption of IAS and improve financial reporting quality in their respective countries.

Keywords: accounting, international, standards, finance

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Authors: Sabur Mollah, Asma Mobarek

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This study aims to explore the endogenous relationship between Shari’ah governance and board governance for Islamic banks to identify complementary or substituting relationship between these governance parameters. By using a sample of 161 Islamic Banks from 24 countries for the period of 2005-2013, we show an endogenous relationship between Shari’ah Supervisory Board (SSB) and Board of Directors (BoD). In this relationship, SSB and BoD complement each other. We also show that this complementary relationship between SSB and BoD helps enhance both management and asset quality, but mitigates capital adequacy, earnings, and liquidity in Islamic banks. The study has important implications for financial stability in the Islamic banking system.

Keywords: Shari’ah Supervisory Board, Boards of Directors, Islamic banking, financial stability

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Authors: Fereshteh Darash

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Reflective tax management corresponds to the Agency Theory since it determines the motivation of managers for tax management actions and short-term and long-term consequences. Therefore, selection of tax strategy contributes to the tax and financial position of the firm in the future. The aim of the present research is to evaluate the effect of tax management components on risk-taking of firms listed in Tehran stock exchange by using regression analysis method. Results show that tax effective rate, tax risk and tax planning have no significant effect on the firm's future risk. Results suggest that stakeholders assess the effective tax rate and delay in tax payment in line with their benefits. They tend to accept the higher risk cost for reduction of tax payments and benefits of higher liquidity in current period. Hence, effective tax rate and tax risk have no significant effect on future risk of the firm. Moreover, tax planning yields no information regarding the predictability of the future profits and as a result, it has no significant effect on the future risk of the firm since specific goals of financial reporting are in priority for the stakeholders and regardless of the firm’s data analysis, they take investment decisions and they less intend to purchase the stocks in a rational manner.

Keywords: tax management, tax effective rate, tax risk, tax planning, firm risk

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Authors: Sareh Rajabi, Salwa Bheiry

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In general, Covid-19 created many financial and non-financial damages to the economy and community. Level and severity of covid-19 as pandemic case varies over the region and due to different types of the projects. Covid-19 virus emerged as one of the most imperative risk management factors word-wide recently. Therefore, as part of portfolio management assessment, it is essential to evaluate severity of such risk on the project and program in portfolio management level to avoid any risky portfolio. Covid-19 appeared very effectively in South America, part of Europe and Middle East. Such pandemic infection affected the whole universe, due to lock down, interruption in supply chain management, health and safety requirements, transportations and commercial impacts. Therefore, this research proposes Analytical Hierarchy Process (AHP) to analyze and assess such pandemic case like Covid-19 and its impacts on the construction projects. The AHP technique uses four sub-criteria: Health and safety, commercial risk, completion risk and contractual risk to evaluate the project and program. The result will provide the decision makers with information which project has higher or lower risk in case of Covid-19 and pandemic scenario. Therefore, the decision makers can have most feasible solution based on effective weighted criteria for project selection within their portfolio to match with the organization’s strategies.

Keywords: portfolio management, risk management, COVID-19, analytical hierarchy process technique

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Authors: Nela Milosevic, Sladjana Barjaktarovic Rakocevic, Sladjana Benkovic, Nemanja Milanovic

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Nowadays, performance measurement systems play a key role in evaluating the strategic performances of an organization. On the other hand, there has been a shift towards the Balanced Scorecard (BSC), which has been recognized as a valuable managerial approach. The main goal of this paper is to analyze the main performances of Serbian banks measured at the branches level, through the usage of the Balanced Scorecard framework. Although an extensive number of practitioners have an interest in the Balanced Scorecard approach, little empirical research has been conducted on the implementation of its concept in the service sector like banks, especially within developing countries. From the beginning of August till the end of September 2015, authors have been conducting in-depth interviews among a number of experts from the most successful banks in Serbia. The results show that the non-financial measures, especially, customer oriented indicators and product/ service oriented indicators, seem to be very important factors for improving not only the financial situation within the bank, but also overall business performances. Additionally, the findings prove that there is the cause-effect relationship between non-financial and financial dimensions of the Balanced Scorecard. Having in mind that the banks are still using outdated performance evaluation systems, such as annual, quarterly and monthly reports, we hope that this paper will contribute to the knowledge of how banks in Serbia may apply the Balanced Scorecard approach to evaluate their performance on the most efficient and effective way.

Keywords: balanced scorecard approach, bank management, performance measurement systems, strategic performances

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Authors: Prateep Wajeetongratana

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The objectives of the research were to examine that how management accounting techniques were perceived and used by companies listed on the stock exchange and to investigate similarities or differences of management accounting practices between companies listed on the stock exchange and Thai SMEs. Descriptive and inferential statistics were employed. The finding found that almost all of the companies used traditional management accounting techniques more than advanced management accounting techniques. Four management accounting techniques having no significant association with business characteristic were standard costing, job order costing, process costing. The barriers that Thai SMEs encountered were a lack of proper accounting system and the insufficient knowledge in management accounting of the accountants. The comparison results revealed that both companies listed on the stock exchange and Thai SMEs used traditional management accounting techniques more than advanced techniques.

Keywords: companies listed on the stock exchange, financial budget, management accounting, operating budget

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Authors: Petr Gurný

Abstract:

One of the most important tasks in the risk management is the correct determination of probability of default (PD) of particular financial subjects. In this paper a possibility of determination of financial institution’s PD according to the credit-scoring models is discussed. The paper is divided into the two parts. The first part is devoted to the estimation of the three different models (based on the linear discriminant analysis, logit regression and probit regression) from the sample of almost three hundred US commercial banks. Afterwards these models are compared and verified on the control sample with the view to choose the best one. The second part of the paper is aimed at the application of the chosen model on the portfolio of three key Czech banks to estimate their present financial stability. However, it is not less important to be able to estimate the evolution of PD in the future. For this reason, the second task in this paper is to estimate the probability distribution of the future PD for the Czech banks. So, there are sampled randomly the values of particular indicators and estimated the PDs’ distribution, while it’s assumed that the indicators are distributed according to the multidimensional subordinated Lévy model (Variance Gamma model and Normal Inverse Gaussian model, particularly). Although the obtained results show that all banks are relatively healthy, there is still high chance that “a financial crisis” will occur, at least in terms of probability. This is indicated by estimation of the various quantiles in the estimated distributions. Finally, it should be noted that the applicability of the estimated model (with respect to the used data) is limited to the recessionary phase of the financial market.

Keywords: credit-scoring models, multidimensional subordinated Lévy model, probability of default

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Authors: Shazia Ali, Yves Mard, Éric Severin

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To the best of our knowledge, this is the first study to have analyzed the impact of a) firm-specific product-market power and b) industry competition on earnings management behavior of European firms in distress versus healthy years while controlling for firm-level characteristics. We predicted a significant relationship between firms’ product market power and earnings management tools and their trade-off under the moderation effect of financial distress. We found that the firm-level market power hereinafter referred to as MP (proxied by the industry-adjusted Lerner Index) is positively associated with both real and accrual earnings management. However, MP is associated with a higher level of real earnings management compared to accrual earnings management in distress years compared to healthy years. On the other hand, industry product market power (representing low competition and proxied by the inverse of the total number of firms in an industry hereinafter referred to as NUMB) and firms product market power (proxied by firm market share hereinafter referred to as MS) are associated with lower inflationary accruals and higher deflationary accruals respectively. On the other hand, they are found to be linked with higher real earnings management in distress versus healthy years. When we divided the sample into small and big firms based on their respective industry-year median total assets, we found that all three measures of industry competition (Industry Median Lerner Index (hereinafter referred to as IMLI), NUMB, and Herfindahl–Hirschman Index (hereinafter referred to as HHI) indicate that small firms in low-competitive industries in financial distress are more likely to inflate their earnings through discretionary accruals. While big firms in this situation are more likely to lower the use of both inflationary and deflationary discretionary accruals as indicated by IMLI and HHI and trade-off accruals earnings management for real earnings management as indicated by NUMB. Moreover, IMLI and HHI did not show any interesting results when we divided the sample based on the firm Lerner Index/Market Power. However, the distressed firms with high market power (MP>industry median) are found to engage in income-decreasing discretionary accruals in low-competitive industries (high NUMB). Whereas firms with low market power in the same industry use downward discretionary accruals but inflate income using real activities (abnCFO). Our findings are robust across alternate measures of discretionary accruals and financial distress, such as the Altman Z-Score. The finding of the study is valuable for accounting standard setters, competition authorities, policymakers, and investors alike to help in informed decision-making.

Keywords: financial distress, earnings management, market competition

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Authors: Ifedapo Francis Awolowo

Abstract:

The unrelenting series of embarrassing audit failures should stimulate a paradigm shift in accounting. And in this age of information revolution, there is need for a constant improvement on the products or services one offers to the market in order to be relevant. This study explores the perceptions of external auditors, forensic accountants and accounting academics on whether a paradigm shift to forensic accounting can reduce financial statement frauds. Through Neo-empiricism/inductive analytical approach, findings reveal that a paradigm shift to forensic accounting might be the right step in the right direction in order to increase the chances of fraud prevention and detection in the financial statement. This research has implication on accounting education on the need to incorporate forensic accounting into present day accounting curriculum. Accounting professional bodies, accounting standard setters and accounting firms all have roles to play in incorporating forensic accounting education into accounting curriculum. Particularly, there is need to alter the ISA 240 to make the prevention and detection of frauds the responsibilities of bot those charged with the management and governance of companies and statutory auditors.

Keywords: financial statement fraud, forensic accounting, fraud prevention and detection, auditing, audit expectation gap, corporate governance

Procedia PDF Downloads 328