Islam Abdeljawad and Fauzias Mat Nor
The purpose of this paper is to investigate how the timing behavior and the adjustment toward the target of capital structure interact with each other in the capital structure…
Abstract
Purpose
The purpose of this paper is to investigate how the timing behavior and the adjustment toward the target of capital structure interact with each other in the capital structure decisions. Past literature finds that both timing and targeting are significant in determining the leverage ratio which is inconsistent with any standalone framework. This study argues that the preference of the firm for timing behavior or targeting behavior depends on the cost of deviation from the target. Since the cost of deviation from the target is likely to be asymmetric between overleveraged and underleveraged firms, the direction of the deviation from the target leverage is expected to alter the preference toward timing or targeting in the capital structure decision.
Design/methodology/approach
This study used the GMM system estimators with the Malaysian data for the period of 1992-2009 to fit a standard partial adjustment model and to estimate the speed of adjustment (SOA) of capital structure.
Findings
This study finds that Malaysian firms, on average, adjust their leverage at a slow speed of 12.7 percent annually and this rate increased to 14.2 percent when the timing variable is accounted for. Moreover, the SOA is found to be significantly higher and the timing role is lower for overleveraged firms compared with underleveraged firms. Overleveraged firms seem to find less flexibility to time the market as more pressure is exerted on them to return to the target regardless the timing opportunities because of the higher costs of deviation from the target leverage. Underleveraged firms place lower priority to rebalance toward the target compared with overleveraged firms as the costs of being underleveraged are lower and hence, these firms have more flexibility to time the market.
Research limitations/implications
The findings of this study support that firms consider both targeting and timing in their financing decisions. No standalone theory can interpret the full spectrum of empirical results. The empirical work is based on partial adjustment model of leverage; however, this model has been criticized by inability to distinguish between active adjustment behavior and mechanical mean reversion. This is an avenue for future research.
Originality/value
This study investigates if targeting and timing behaviors are mutually exclusive as theoretically expected or they can coexist. A theoretical explanation and an empirical investigation support the conclusion that firms consider both targeting and timing in their financing decisions. This study provides evidence from Malaysian firms that are characterized by concentrated ownership structure and separation of cash flow rights and control rights of the firm due to pyramid ownership structure. Therefore, it provides evidence on how environmental characteristics may affect the capital structure determinants of the firm.
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Hasnah Haron, Fauzias Mat Nor, Fuadah Johari, Hanim Misbah and Zurina Shafii
The paper aims to examine whether attitude, subjective norm and perceived behavioural control (PBC) would influence the level of acceptance of the benefidonors concept amongst…
Abstract
Purpose
The paper aims to examine whether attitude, subjective norm and perceived behavioural control (PBC) would influence the level of acceptance of the benefidonors concept amongst waqf stakeholders. In addition, antecedents to attitude, namely, religiosity, level of knowledge, perception of fairness and self- efficacy, were also examined, resulting in eight hypotheses of the study.
Design/methodology/approach
This research used an online survey questionnaire. Respondents are waqf stakeholders comprising of donors, beneficiaries, waqf managers, activists, volunteers and the community. A total of 198 usable responses were analysed using SmartPLS version 3.0.
Findings
The research model explains 57.5% of the intention to accept the benefidonors concept. Six hypotheses were accepted, which includes attitude, subjective norms and perceived behaviour control to accept the concept; perception of fairness to attitude; and self-efficacy and facilitating resources to PBC.
Research limitations/implications
The study looks at six groups of waqf stakeholders but could not distinctly categorize the stakeholders into groups because of their multiple roles. Future studies can examine each of the different group.
Practical implications
Waqf institutions should improve their efforts to encourage beneficiaries and donors to become benefidonors such as having an online platform and providing training for waqf stakeholders.
Social implications
Benefidonors can help uplift the poverty level of the less privileged, reduce cost of service and thus assist to reduce the gap of income inequality in the community.
Originality/value
To the best of the authors’ knowledge, this is the first empirical study that examines the intention of Waqf stakeholders to accept the benefidonors concept.
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Nevi Danila, Kamilah Kamaludin, Sheela Sundarasen and Bunyamin Bunyamin
The purpose of this paper is to examine investor sentiment by measuring the impact of market sentiment shocks on the volatility of the Islamic stock index of five ASEAN countries…
Abstract
Purpose
The purpose of this paper is to examine investor sentiment by measuring the impact of market sentiment shocks on the volatility of the Islamic stock index of five ASEAN countries, with noise traders as a proxy for market sentiment.
Design/methodology/approach
The GJR-GARCH model is used to capture the empirically observed fact that negative shocks in the past period have a stronger impact on variance than positive shocks in the present.
Findings
All five ASEAN Islamic stock indices show clustering volatility. However, only three countries, namely, Malaysia, Thailand and Singapore, demonstrate leverage effects. In addition, the effect of market sentiment on Islamic stock index returns is observed in the Indonesian and Malaysian markets, which are the two largest Islamic markets with a dominant Muslim population in the ASEAN. This finding implies that the trading behaviours of Muslim investors in the Shariah market are the same as their behaviours in the conventional market, that is, nonadherence to the Sunnah.
Practical implications
Whilst establishing investment strategies, creating portfolios and providing client-advisory services, investors and fund managers should factor in the presence of market sentiment and its impact on stock performance and volatility. In addition, a capital market system preventing rumour-based transactions is compelling.
Social implications
In some markets, the Islamic financial products awareness should be increased through education to attract increased domestic investors with the potential to boost growth in the Islamic stock market.
Originality/value
Investigation market sentiment impacts on the Islamic stock index using noise traders as a proxy.
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Muhammad Rehan and Mustafa Gül
This study aimed to examine the efficient market hypothesis (EMH) for the stock markets of 12 member countries of the Organization of Islamic Cooperation (OIC), such as Egypt…
Abstract
Purpose
This study aimed to examine the efficient market hypothesis (EMH) for the stock markets of 12 member countries of the Organization of Islamic Cooperation (OIC), such as Egypt, Indonesia, Jordan, Kuwait, Malaysia, Morocco, Pakistan, Saudi Arabia, Tunisia, Turkey and the United Arab Emirates (UAE), during the global financial crisis (GFC) and the COVID-19 (CV-19) epidemic. The objective was to classify the effects on individual indices.
Design/methodology/approach
The study employed the multifractal detrended fluctuation analysis (MF-DFA) on daily returns. After calculation and analysis, the data were then divided into two significant events: the GFC and the CV-19 pandemic. Additionally, the market deficiency measure (MDM) was utilized to assess and rank market efficiency.
Findings
The findings indicate that the average returns series exhibited persistent and non-persistent patterns during the GFC and the CV-19 pandemic, respectively. The study employed MF-DFA to analyze the sequence of normal returns. The results suggest that the average returns series displayed persistent and non-persistent patterns during the GFC and the CV-19 pandemic, respectively. Furthermore, all markets demonstrated efficiency during the two crisis periods, with Turkey and Tunisia exhibiting the highest and deepest levels of efficiency, respectively. The multifractal properties were influenced by long-range correlations and fat-tailed distributions, with the latter being the primary contributor. Moreover, the impact of the fat-tailed distribution on multifractality was found to be more pronounced for indices with lower market efficiency. In conclusion, this study categorizes indices with low market efficiency during both crisis periods, which subsequently affect the distribution of assets among shareholders in the stock markets of OIC member countries.
Practical implications
Multifractal patterns, especially the long memory property observed in stock markets, can assist investors in formulating profitable investment strategies. Additionally, this study will contribute to a better understanding of market trends during similar events should they occur in the future.
Originality/value
This research marks the initial effort to assess the impact of the GFC and the CV19 pandemic on the efficiency of stock markets in OIC countries. This undertaking is of paramount importance due to the potential destabilizing and harmful effects of these events on global financial markets and societal well-being. Furthermore, to the best of the authors’ knowledge, this study represents the first investigation utilizing the MFDFA method to analyze the primary stock markets of OIC countries, encompassing both the GFC and CV19 crises.
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Hardius Usman, Dipa Mulia, Chairy Chairy and Nucke Widowati
The purpose of this study is to propose an extended model of technology acceptance model (TAM) in the use of financial technology (Fintech) in the context of Islamic philanthropy…
Abstract
Purpose
The purpose of this study is to propose an extended model of technology acceptance model (TAM) in the use of financial technology (Fintech) in the context of Islamic philanthropy, especially by studying and exploring the role of trust, image and religiosity in TAM, and to provide policy recommendation for the authorized organizations in Indonesia regarding several crucial factors that need to be considered so that Indonesian Muslims are willing to use Fintech for philanthropic purposes.
Design/methodology/approach
Online surveys were conducted to collect the data, of which 425 respondents have completed and returned the questionnaire. Multiple linear regression model and multi-variate analysis of variance are applied to test the statistical hypotheses.
Findings
This study supports the theory of reasoned action and the TAM. In which, the relationship between perceived ease of use and perceived usefulness with TAM is determined by trust and religiosity.
Research limitations/implications
It is worth to note the limitation of this study lies in the sampling technique and data collection. Indonesia is a fast archipelago country and consists of 34 provinces, but not all of the provinces are represented in the sample. The selected respondent heavily depends on the previous respondent’s willingness to share the questionnaire. So that the number of respondents does not proportionate to region or province.
Originality/value
This study offers an extended model of TAM that has never been done before, namely, by exploring the role of trust, religiosity and image, in the context of Islamic philanthropy.