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This paper examines the influence of Shariah compliance (SC) on firms' net working capital (NWC) target and adjustment speed.

The study samples of non-financial firms taken from six Gulf Cooperation countries between 2005 and 2019 and employs static and dynamic models to answer the present study research questions.

The outcomes of the study indicate that SC is one of the major determinants of the decision made by the corporation regarding their NWC. More specifically, enterprises that are compliant with restrictions within Shariah are seen to have laid targets of their NWC at a level that exceeds that of enterprises that are not compliant. Furthermore, compared to conventional firms, they seem to have higher speed when adjusting to meet set NWC targets. Submission to Islamic laws limits the choices from which an enterprise can outsource capital from existing funding instruments. Therefore, they experience a higher expected cost of bankruptcy. That being the case, such financial managers should readily maintain and adjust to higher NWC targets to meet current corporate needs, alleviate the risk of bankruptcy and lower dependency on expensive external funding options.

To the authors’ knowledge, this is the first study to explore the influence of SC on firms' NWC target and adjustment speed.

This paper aims to provide a comprehensive investigation into the different roles of cash holding decisions on Shariah-compliant and non-Shariah-compliant firms’ performance. Therefore, the objective of this study is to analyze the significant relationship of liquidity on Shariah- and non-Shariah-compliant corporations.

This study sample includes non-financial firms listed in six Gulf Cooperation Council (GCC) markets between 2005 and 2019. The study uses panel fixed effects and the dynamic generalized method of moments (system-GMM) models to test the relationship between cash holding and firm performance. The firms’ performance is measured using four widely used proxies representing book and market measures of performance including return on assets, return on equity, earnings before interest and tax to total assets and Tobin’s Q.

The results explore that the nature of the relationship between cash holdings and performance varies across Shariah-compliant and non-Shariah-compliant firms. Specifically, cash holdings are positively and significantly related to Shariah-compliant firms’ performance. However, cash reserves are not significantly related to conventional firms’ performance. These findings indicate that Shariah-compliant firms rely more on their cash holdings to avoid costly and less available external financing, meet everyday business needs and invest in profitable projects. In contrast, the value for cash holding is less important for non-Shariah-compliant firms, as their external financing options are less restricted compared to Shariah-compliant firms.

This study is not free from limitations. More specifically, the sample of this study comprises of firms listed in GCC countries, which share common features. It would be interesting for future research to examine the linkage between cash holdings and Shariah-compliant and conventional firms’ performance by applying a larger sample, such as firms located in countries of the Organization of Islamic Cooperation.

The findings of this paper provide useful insights for managers and investors on the important role of cash management for Shariah-compliant firms. Policymakers and bankers need to develop Shariah-based financial products to ease Islamic financing sources. Moreover, the findings of this paper call for more research on the importance of liquidity management for Shariah-compliant firms.

This study extends the Islamic finance literature by exploring the key role of cash holdings to Shariah-compliant firms. To the best of the authors’ knowledge, this study is the first study to investigate cash holdings and performance between Shariah-compliant and non-Shariah-compliant firms.

The purpose of this study is to investigate the difference between the determinants of cash holdings of Shariah-compliant and non-Shariah-compliant firms, for non-financial corporations in the Gulf Cooperation Council (GCC).

The data include all non-financial firms listed in six GCC markets over a period 2005–2019. The IdealRatings database is used to identify Shariah-compliant firms in the GCC. To examine the determinants of cash holdings, a static model is used. To confirm the applicability of the method applied, the Breusch–Pagan Lagrange Multiplier (LM) and Hausman (1978) are used to choose the most efficient and consistent static panel regression.

The results show that, for Shariah-compliant firms, the relevant determinants of cash holdings are leverage, profitability, capital expenditure, net working capital and operating cash flow. For non-Shariah-compliant firms, the only relevant determinants of cash holdings are leverage, net working capital and operating cash flow. The findings suggest that the cash holding decisions of Shariah-compliant firms can be best explained using the pecking order theory. This reveals that Shariah-compliant firms use liquid assets as their first financing option, due to the Shariah regulations.

Future studies may investigate the optimal levels of cash holdings and compare the adjustment speeds toward target cash holdings of both the Shariah-compliant firms and their conventional counterparts.

This study is the first to investigate the difference between the determinants of cash holdings of Shariah-compliant and non-Shariah-compliant firms.

The purpose of this paper is to investigate whether banks’ environmental, social and governance (ESG) initiatives increase or decrease banks’ efficiency.

The sample used includes all listed banks in Saudi Arabia over the years 2016–2021. The authors performed different methods, including data envelopment analysis (DEA), ordinary least squares (OLS) and quantile regressions.

The OLS regression results show a negative linkage between ESG and banks’ efficiency. Further, the quantile regression analysis indicates that the ESG effect on banks' efficiency is negative across different quantiles. However, the DEA method shows that the DEA-generated scores for Banks’ efficiency are higher for ESG-adjusted scores in comparison to efficiency scores without incorporating ESG. Further, the comparison of the DEA-generated efficiency scores, over the sample period, of adjusted ESG banks still suffers from decreasing in their efficiency over the years. Concerning existing theory, the results are consistent with the stakeholders and the resource-based theories postulating that banks' ESG practices are ethical commitments and enable firms to gain competitive advantage and increase their reputation among stakeholders.

The findings of this study offer important implications for regulators and bankers. Policymakers and bank regulators should make collective efforts to encourage financial institutions to adopt green finance initiatives to create an efficient financial system capable of counteracting risks from the external environment and stimulating economic growth. Banks’ managers should be aware that ESG initiatives serve society and the environment and offer a positive influence on banks’ efficiency.

To the best of the authors’ knowledge, this is the first study to explore the influence of ESG activities on banks' efficiency using DEA for banks in Saudi Arabia.

The purpose of this paper is to study the relationship between corporate cash holdings and financial performance, both linearly and non-linearly, for listed non-financial firms in Saudi Arabia.

The data include all listed firms in Saudi Arabia’s primary stock market, excluding banks and insurance companies, over 2005–2016. The source for all data is the Osiris database. In evaluating the association between cash holdings and financial performance, static (i.e. pooled ordinary least squares) and dynamic (i.e. system generalized method of moments) specifications were implemented. Further, to confirm the non-linear linkage between cash reserves and financial performance, a U test was used.

The findings show that cash holdings play a significant role in firms’ performance; specifically, this relationship is non-linear, exhibiting an inverse U shape, driven by levels of cash reserves. This non-linear relationship verifies the tenets of the trade-off theory of optimum cash level based on the benefits and costs of holding cash.

It is recommended that future studies investigate corporate liquidity and performance among Shariah-compliant firms and their conventional counterparts.

The findings of this study provide useful insights for managers and policymakers on efficient levels of corporate liquidity management.

This paper provides further insights for investors on the role of corporate cash holding levels in firm performance.

To the best of the author’s knowledge, this paper is among the first to explore a non-linear relationship between cash holdings and firms’ performance using accounting measures.

Since it is believed that economic growth in oil-rich countries is highly influenced by oil price movements, this study aims to explore the relationship between oil price volatility (uncertainty) and earnings-management decisions.

Financial data from oil-exporting countries were used to explore the relationship between oil price volatility and earnings-management decisions. The study used univariate and multivariate analysis. The modified Jones model is the proxy accrual earnings management. Further, the standard deviation of daily oil price returns is used to proxy annualised oil price volatility.

The results show that there is an association between oil price volatility and accrual earnings management. Specifically, there is a positive and significant relationship between negative accruals and oil price volatility, indicating that firms are inclined to conduct income-decreasing earnings management in periods of high oil price volatility.

This study’s findings have important implications for regulators and investors because they indicate that the uncertainty of oil price volatility has an influence on earnings quality in oil-dependent economies. This is especially important considering the ongoing debate on transparency issues.

To the best of the authors’ knowledge, this study is the first to investigate the relationship between oil prices volatility and earning management behaviour for non-financial firms. Further, the study uses unique data of oil-dependent economies.

The purpose of this study is twofold. First, this research explores the level of Islamic financial literacy of customers in the context of Islamic banking. Second, this study examines the determinants of customer adoption of Islamic banking in Turkey.

This study gathered sample data from 409 participants determined using the purposive sampling method. In the study, first, the reflective measurement model is used to examine the reliability, validity and multicollinearity problems of the variables. Then, AMOS structural equation model (SEM) is used to reveal the relationship between Islamic financial literacy and Islamic banking services. Additionally, this study performed both descriptive and inferential analysis to understand customer literacy about Islamic banking and their adoption behavior of Islamic banking.

The results obtained from descriptive assessment indicate that Turkish customers of Islamic banking possess sufficient literacy about Islamic banking. Moreover, the results from SEM indicate that the adoption of Islamic banking by customers is significantly predicted by the role of Sharia Board management, Islamic banking and purpose of financial institution, religious factor and legitimacy of Islamic financial system.

This study focuses only on the level of knowledge and perceptions of customers who have accounts in Islamic banks or financial institutions in Turkey. It does not focus on the level of knowledge and perception of Muslims who do not have accounts in Islamic banks and financial institutions.

Previous studies on Islamic banking are mostly studies that investigate customers’ perceptions of the Islamic banking system and why individuals prefer Islamic banks. In particular, studies examining the relationship between individuals’ Islamic financial literacy level and Islamic banking preferences are limited. This study is considered to be an original study as it investigates the relationship between the Islamic financial literacy level of individuals and their adoption of Islamic banking services in Turkey.

This study examines the impact of oil price volatility on firm profitability. As Shariah-compliant firms operate under restrictions, the study also explores whether oil price volatility affects Shariah-compliant firms differently from their non-Shariah-compliant counterparts.

The study sample includes all non-financial firms listed on Gulf Cooperation Council stock exchanges from 2005 to 2019. In evaluating the oil price volatility–profitability relationship, static (panel fixed effects) and dynamic (system generalised method of moments) models were used.

Oil price volatility significantly depresses firm profitability. In addition, Shariah-compliant firms are more significantly affected by oil price volatility than their non-Shariah-compliant peers. The results suggest that high oil price volatility exposes Shariah-compliant firms to higher bankruptcy risk than non-Shariah-compliant firms and that positive and negative oil price shocks have asymmetric effects on firm performance.

The findings of the paper call for more economic diversification by supporting non-oil sectors in the region and raise the need for more development of Islam-compliant products that compete with traditional instruments to help Shariah-compliant firms cope with uncertainty. Moreover, managers need to prepare quick alert and response procedures to reduce the negative impacts of oil price volatility on profitability.

To the best of the authors’ knowledge, this study is the first to explore the relationship between oil price volatility and profitability of non-financial firms. Further, the study extends prior Islamic corporate finance literature by enhancing the understanding of how Islamic corporate decisions affect firm performance during instability.

This paper aims to assess the rank of Shariah compliance (SC) and its impact on the financial performance of non-financial companies listed on the Saudi Stock Exchange. It seeks to understand the relationship between adherence to Shariah principles and the financial success of these companies, providing insights into the importance of SC in the Saudi Arabian context.

The study adopts a quantitative research approach, using financial and SC data from non-financial companies listed on the Saudi Stock Exchange. SC is measured using the Accounting and Auditing Organization for Islamic Financial Institutions standards. Financial performance is evaluated using various financial indicators, including return on assets (ROA), return on equity (ROE) and return on investments (ROI). Statistical analysis, including regression analysis, is conducted to examine the relationship between SC and financial performance.

The findings indicate a positive association between SC and financial performance in non-financial companies listed on the Saudi Stock Exchange. Companies with higher ranks of SC demonstrate superior financial performance, as evidenced by higher ROA, ROE and ROI. This suggests that adhering to Shariah principles can contribute to improved financial outcomes for companies operating in the Saudi Arabian market.

The study highlights the practical implications of maintaining SC for non-financial companies in Saudi Arabia. It emphasizes the importance of aligning business practices with Shariah principles to enhance financial performance. The findings suggest that companies can benefit from implementing Shariah-compliant strategies and practices, potentially attracting investors and improving their overall competitiveness in the market.

The social implications of SC in the Saudi Arabian context are significant. Adhering to Shariah principles not only ensures compliance with religious and cultural norms but also promotes ethical and responsible business behaviour. Companies that prioritize SC contribute to the development of a socially responsible and sustainable business environment.

To the best of the authors’ knowledge, this study represents the first investigation into the impact of SC rank on financial performance. By examining non-financial companies listed on the Saudi market, it contributes significantly to existing literature by providing empirical evidence supporting a positive correlation between SC rank and financial outcomes. The findings offer valuable insights for companies, investors and policymakers in Saudi Arabia, enhancing their understanding of the unique dynamics between SC rank and financial performance. This research enriches the body of knowledge in Islamic finance and business, making a notable contribution to the field and opening avenues for further exploration.

This paper aims to empirically investigate the moderating role of corporate governance (CG) in the capital structure-performance relationship.

The analysis is based on top Business Today-500 companies and covers a time span of 10 years. The fixed effect panel regression model is used to examine the impact of CG mechanisms on the relationship between capital structure and firm performance.

The core findings of the study indicate significant positive moderating role of board independence, board size and family ownership on the relationship between leverage and performance.

The results enable the managers of Indian firms to comprehend the significance of CG framework while taking financing decisions. The findings encourage managers to raise debt funds in those firms that adhere to good governance norms.

Unlike extant studies that emphasize on the moderating impact of single CG variable in leverage-performance relationship, the current work comprehensively examines the role of many CG factors that moderate the relationship between capital structure and firm performance. To the best of the authors’ knowledge, the present study is the first of its kind with respect to India.