Basil Al-Najjar and Dana Al-Najjar
The purpose of this paper is to investigate the effect of external financing needs on both firm value and corporate governance mechanisms within the UK SME context. This framework…
Abstract
Purpose
The purpose of this paper is to investigate the effect of external financing needs on both firm value and corporate governance mechanisms within the UK SME context. This framework is of importance because of the limited external financial resources SMEs might face.
Design/methodology/approach
The authors consider the endogeneity problem between corporate governance mechanisms and firm value, and hence, the three stages least squares and the instrumental variables based on two stages least squares estimation methods are employed.
Findings
The authors find a positive relationship between external financing needs and firm value. In addition, the authors detect that size and profitability are positively associated with firm value in the sample. Concerning the corporate governance index (CGI), the authors detect that big SMEs and those with low-debt levels have better corporate governance structures.
Originality/value
The authors employ a CGI for the sample which is constructed using ten corporate governance variables. The authors also examine different factors that affect SMEs 2019 governance by applying different models including logistic analysis.
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Hazem Al-Najjar, Nadia Al-Rousan, Dania Al-Najjar, Hamzeh F. Assous and Dana Al-Najjar
The COVID-19 pandemic virus has affected the largest economies around the world, especially Group 8 and Group 20. The increasing numbers of confirmed and deceased cases of the…
Abstract
Purpose
The COVID-19 pandemic virus has affected the largest economies around the world, especially Group 8 and Group 20. The increasing numbers of confirmed and deceased cases of the COVID-19 pandemic worldwide are causing instability in stock indices every day. These changes resulted in the G8 suffering major losses due to the spread of the pandemic. This paper aims to study the impact of COVID-19 events using country lockdown announcement on the most important stock indices in G8 by using seven lockdown variables. To find the impact of the COVID-19 virus on G8, a correlation analysis and an artificial neural network model are adopted.
Design/methodology/approach
In this study, a Pearson correlation is used to study the strength of lockdown variables on international indices, where neural network is used to build a prediction model that can estimate the movement of stock markets independently. The neural network used two performance metrics including R2 and mean square error (MSE).
Findings
The results of stock indices prediction showed that R2 values of all G8 are between 0.979 and 0.990, where MSE values are between 54 and 604. The results showed that the COVID-19 events had a strong negative impact on stock movement, with the lowest point on the March of all G8 indices. Besides, the US lockdown and interest rate changes are the most affected by the G8 stock trading, followed by Germany, France and the UK.
Originality/value
The study has used artificial intelligent neural network to study the impact of US lockdown, decrease the interest rate in the USA and the announce of lockdown in different G8 countries.
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Dana Al-Najjar and Basil Al-Najjar
The purpose of this paper is to build a neural network system to predict corporate credit rating in Jordanian non-financial firms, using 19 different financial characteristics…
Abstract
Purpose
The purpose of this paper is to build a neural network system to predict corporate credit rating in Jordanian non-financial firms, using 19 different financial characteristics such as profitability, leverage ratios, liquidity, bankruptcy, and sales performance.
Design/methodology/approach
The study adopts two neural network techniques namely, Kohonen network and Back Propagation Neural Network (BPNN). Our sample includes the manufacturing firms that have provided the required financial information for the period from 2000 to 2007.
Findings
BPNN has successfully predicted firms with high performance gaining A rating and the bankrupted firms with D rating for the period from 2005 to 2007.
Originality/value
This study is the first study to investigate credit rating in Jordan using Neural Network technique.
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Ahmad Yuosef Alodat, Zalailah Salleh, Hafiza Aishah Hashim and Farizah Sulong
This study aims to assess the effect of director board and audit committee attributes and ownership structure on firm performance. In general, resource dependency and agency…
Abstract
Purpose
This study aims to assess the effect of director board and audit committee attributes and ownership structure on firm performance. In general, resource dependency and agency theories have underlined the superior performance of firms equipped with stronger Corporate Governance (CG) versus those of deficient governance. Concurrently, the study delineated the provisions of ownership structure provision, specifically foreign ownership and institutional ownerships, thus describing the component denoting the structural significance in explicating firm performance.
Design/methodology/approach
The current study implemented an empirical approach involving the construction of extensive CG measures thus, subjected to 81 non-financial firms listed on the Amman Stock Exchange spanning the period of 2014–2018.
Findings
The current study identified the positive and significant relationship between the board of directors and audit committee characteristics with the firm performance measures tested, namely, return on equity (ROE) and Tobin’s Q. In terms of ownership structure, both foreign and institutional ownerships yielded a significant and positive relationship with ROE. Meanwhile, Tobin’s Q led to an insignificant and negative relationship between both ownership types and firm performance measures.
Practical implications
The analytical outcomes substantiate the possibility of enhanced performance shown by growing global firms because of the implementation of CG mechanisms, specifically because of the practices resulting in minimised agency costs.
Originality/value
The current study offers novel evidence detailing the impact of CG effectiveness towards performance and its implementation in emerging markets following the minimal amount of scholarly efforts on the topic. It is a timely contribution towards the current understanding of the relationship linking governance and performance for the purpose of ensuring the adoption and imposition of a strong corporate governance code by the government.
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Ascarya Ascarya and Atika Rukminastiti Masrifah
This study aims to develop the maqasid index (MI) for Islamic corporate social responsibility (CSR), namely, Dana Abadi Umat (DAU) (Ummah’s Endowment Fund) or MI-DAU in Indonesia.
Abstract
Purpose
This study aims to develop the maqasid index (MI) for Islamic corporate social responsibility (CSR), namely, Dana Abadi Umat (DAU) (Ummah’s Endowment Fund) or MI-DAU in Indonesia.
Design/methodology/approach
Modeling and weighting are based on Delphi and analytic network process (ANP) methods, called Delphi–ANP additive weighting. The Delphi method was applied to design and validate the factors of the MI-DAU model, and the ANP method was applied to generate and validate weights for these factors. Finally, the MI-DAU is calculated, based on the planned budget and actual allocation of DAU returns, called the maslahah fund, using additive weighting.
Findings
Delphi and ANP show significant and robust results. The priority order and weights of maqasid Shariah are safeguard the faith (0.32), safeguard the intellect (0.219), safeguard the life (0.204), safeguard the wealth (0.171) and safeguard the lineage (0.104). Meanwhile, the priority order and weights of the main activities are education (0.190), Ummah’s economy (0.167), Hajj service (0.155), Da’wah (0.124), health care (0.118), social-religious (0.097), worship facilities (0.085) and disaster emergency response (0.065). Finally, the results of MI-DAU show a high index in 2019 and 2020 of 71.89 and 69.51, respectively, generated from allocation ratio of 90.63% and 85.98%, respectively.
Research limitations/implications
Maqasid Shariah used in this study follows Al-Ghazali, where it could also follow maqasid Shariah of Abu Zahrah or Al-Najjar. Moreover, the MI-DAU score uses additive calculations, where it can also use Pentagon calculation.
Practical implications
The improved framework and method used to design MI-DAU in this study could be applied to design more scientific MI for other Islamic financial institutions.
Originality/value
The novelty of this study is in the improved method used to design the MI model, including its factors, using Delphi, and to assign weights of all factors using ANP, where both provide validation for more robust MI model.
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Abdellatif Hussein Abogazia, Hafiza Aishah Hashim, Zalailah Salleh and Abdou Ahmed Ettish
This study aims to investigate the moderating effect of external financing needs on the relationship between the disclosure level of integrated reporting (IR) and firm value using…
Abstract
Purpose
This study aims to investigate the moderating effect of external financing needs on the relationship between the disclosure level of integrated reporting (IR) and firm value using evidence from Egypt.
Design/methodology/approach
This study uses a panel regression analysis for a matched sample of 50 companies listed on the Egyptian Stock Exchange (EGX), specifically from EGX100. The sample covers four years (2017–2020). The current study uses content analysis to measure IR and Tobin’s Q as a proxy for firm value.
Findings
The findings reveal a significant positive relationship between the disclosure level of IR and firm value. In addition, the authors find that external financing needs moderate the relationship between IR and firm value. It is concluded that the higher the disclosure level of IR content, the higher the firm’s value, and that this relationship strengthens in firms with high needs for external financing.
Practical implications
Several practical implications can be derived from the results of the current study. Policymakers and regulators can impose mandatory requirements for IR in Egypt. It also opens new insights for board members, managers, analysts and auditors in forming financing decisions based on annual reports.
Originality/value
The present study has a novel insight from a developing country and significant contributions to the extant literature. The study provides empirical evidence from an emerging economy and an insight into how external financing can be used for firms with different levels of IR. It also provides a comprehensive disclosure index to estimate the level of IR.
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Dana M. Johnson, Jichao Sun and Mark A. Johnson
The primary purpose of the research was to determine whether automotive manufacturers integrate multiple manufacturing initiatives and whether performance measures were impacted…
Abstract
Purpose
The primary purpose of the research was to determine whether automotive manufacturers integrate multiple manufacturing initiatives and whether performance measures were impacted directly by these initiatives.
Design/methodology/approach
A mail survey questionnaire was used to gather data about the attitudinal attributes associated with implementing multiple manufacturing initiatives (i.e. ISO 9001, ISO 14001, lean manufacturing) and changes in key performance measures, both financial and nonfinancial. Descriptive statistics were utilized to gain a better understanding of the level of implementation of specific initiatives. Different forms of regression analysis were used to try to locate a statistically significant predictive model.
Findings
Two surveys of automotive suppliers were conducted during early summer 2001 and 2002 to gather information about multiple initiatives, customer mandates, and performance measurement. The results indicate that suppliers are not integrating the initiatives or linking them to financial and/or nonfinancial performance measurements. It was intended to develop a predictive model linking the implementation of multiple manufacturing initiatives and the impact on changing in performance measures. No statistically significant model was discovered. However, and not surprisingly, the level of implementation of different initiatives varies from one organization to another.
Research limitations/implications
The size of the sample could pose a limitation in terms of generalizabiity. Also, this study was applied to specifically to the automotive supply parts industry and it could be applicable to other manufacturing supply chains.
Practical implications
Automotive industry suppliers have been faced with multiple, mandated requirements from the original equipment manufacturers. Continuing pressures to reduce price, improve quality, while producing an environmental friendly product using lean manufacturing practices has placed a financial strain on suppliers operating with thin profit margins. Are these initiatives being integrated into the overall business strategy and what impact are they having on performance measures? Based on the research, it did not appear to be well integrated. Additionally, a comparative analysis was conducted to note differences between senior management and middle management/professional staff. It was not surprising to find that senior management has higher expectations and opinions regarding implementation levels and performance.
Originality/value
The information in this study is particularly useful to manufacturers or others implementing standards or methodologies and to understand whether there is a direct impact on performance measurements.
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Randi Swandaru and Aishath Muneeza
This study aims to scrutinize the modus operandi of global financial frauds in Islamic financial institutions and assesses whether those frauds can be prevented using High…
Abstract
Purpose
This study aims to scrutinize the modus operandi of global financial frauds in Islamic financial institutions and assesses whether those frauds can be prevented using High Standards of Shariah Governance.
Design/methodology/approach
A qualitative research methodology is deployed to conduct this study by analyzing and scrutinizing academic journals, reports, regulatory guidelines and articles.
Findings
The findings in this study show that the modus operandi ranges from bribery, forged documents, unlawful profiteering, credit limit allowance ignorance, Ponzi scheme, culprit collaboration from inside and outside the banks. This paper also argues that the centralized and high-standard Shariah governance framework better prevents fraud by providing better Shariah supervision and risk management measures.
Research limitations/implications
The observations in this study are limited to financial fraud at Islamic financial institutions that happened in the 21st century with more than $100m in financial loss or penalty.
Originality/value
This study may contribute significantly by providing insight for regulators to strengthen the Shariah governance framework in their respective countries. It also benefits Islamic financial institutions by enhancing their capacity to anticipate future financial fraud.
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Naina Narang, Seema Gupta and Naliniprava Tripathy
The present study uses a meta-analysis technique to explore the association between corporate governance and dividend policy. The extant literature delivers inconclusive findings…
Abstract
Purpose
The present study uses a meta-analysis technique to explore the association between corporate governance and dividend policy. The extant literature delivers inconclusive findings on the relationship between corporate governance and dividend policy. Therefore, this study aims to resolve the issues and deliver comprehensive results.
Design/methodology/approach
The study involves a meta-analysis of 53 research studies using preferred reporting items for systematic reviews and meta-analyses and population, intervention, comparison, outcome and study design approaches. The paper examines the impact of moderators: corporate governance structure (Anglo-American, communitarian or emerging system) and dividend distribution metrics (dividend over net income, dividend over total assets and absolute amount of dividend/dividend per share). The study involves subgroup analysis and meta-regression analysis to examine the impact of moderators.
Findings
The study’s results specify that board size and percentage of female directors significantly impact the dividend decisions of the company. In addition, subgroup analysis and meta-regression results demonstrate that dividend measurement proxy moderates the association between corporate governance and dividend policy.
Originality/value
Based on the existing literature surveyed, to the best of the authors’ knowledge, the current study is the first to conduct a meta-analysis on the relationship between corporate governance and dividend policy. This paper is unique and the first one of its kind (to the best of the authors’ knowledge) to cover all these moderating variables under an umbrella and consolidate the results to understand the existing knowledge and direct future research in the area of corporate governance and dividend decisions.