Abdul Ghafar Ismail, Nik Abdul Rahim Nik Abdul Ghani and Mat Nor Mat Zain
This paper aims to make an attempt to analyze the adoption of wakalah in the tawarruq deposit that may trigger new issue.
Abstract
Purpose
This paper aims to make an attempt to analyze the adoption of wakalah in the tawarruq deposit that may trigger new issue.
Design/methodology/approach
This paper provides a review on the underlying contracts for deposit-taking activities.
Findings
There are two mains findings from this paper – first, the current deposit taking activities are characterized by principal guaranteed, it deems contrary to the nature of mudarabah. Second, we suggest the presence of wakalah in tawarruq term deposits and we argue that the application of the concept of bay al-wakillinafsihi would not affect the validity of wakalah.
Originality/value
This paper is considered to have its own originality in the sense that the introduction of tawarruq-based deposit product by Islamic banks could be the best alternative to the current deposit products.
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The purpose of this paper is to examine, from the agency perspective, the influence of internal audit and audit committee attributes, as well as risk management and internal…
Abstract
Purpose
The purpose of this paper is to examine, from the agency perspective, the influence of internal audit and audit committee attributes, as well as risk management and internal control systems, on the implementation of risk-based auditing among public-listed companies in Malaysia.
Design/methodology/approach
A questionnaire survey was distributed to the in-house internal audit function in approximately 620 public-listed companies. Consequently, data from 117 heads of the internal audit function was collected and analyzed.
Findings
The findings indicate that “audit committee review and concern” and “risk management system” are significantly and positively related to the implementation of risk-based auditing. Most importantly, the results indicate the importance of audit committee inputs and concerns in reviewing internal audit activities. Empirically, the findings also suggest that a more formalized risk environment would foster the existence of a strong risk-aware culture and hence provides a strong foundation for internal audit to implement risk-based auditing. However, internal audit experience, size of internal audit function, audit committee qualifications, and internal control system are not found to be significant predictors of the presence of risk-based auditing.
Research limitations/implications
This study examined only risk-based auditing practices in the in-house internal audit function of public-listed companies; hence, the findings cannot be generalized to all Malaysian-listed companies that outsource or co-source their internal audit activities.
Social implications
An effective internal monitoring mechanism and better quality of internal audit work will minimize potential risks that prevent the achievement of company objectives, reduce propensity to falsify financial information, and improve financial reporting quality.
Originality/value
This study contributes evidence concerning the relationship between internal monitoring mechanisms and the implementation of risk-based auditing among in-house internal audit activity.
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Samuel Jebaraj Benjamin, Mazlina Mat Zain and Effiezal Aswadi Abdul Wahab
The purpose of this study is to examine the agency problem of expropriation using dividends in politically connected firms and the relevance of institutional investors in limiting…
Abstract
Purpose
The purpose of this study is to examine the agency problem of expropriation using dividends in politically connected firms and the relevance of institutional investors in limiting this problem. The growing presence of this group of shareholders offers a unique opportunity to test their importance in the context of dividends payments and expropriation.
Design/methodology/approach
This study uses the Tobit regression to test the association between political connection, institutional investors and dividend payouts. The results are also robust to the three-stage-least squares regressions method.
Findings
The study is based on a random sample of 2,458 Malaysian firms-year observations for the period of 2004-2009. The results reveal that politically connected firms have an inclination to pay lower dividends, while institutional ownership is associated with higher dividend payouts. Furthermore, the findings reveal that higher levels of institutional ownership moderates the negative relationship between politically connected firms and dividends.
Research implications
The findings have an important implication to regulators as it suggests that the institutional investors can influence the dividend payouts in politically connected firms through active monitoring, thus alleviating agency problems. This also provides a positive feedback on the regulators’ governance initiatives that quest to strengthen the roles of institutional investors.
Originality/value
This study is the first to examine the effectiveness of the monitoring role of institutional investors in the context of expropriation by politically connected firms from the perspective of dividend payouts.
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Mahbub Zaman and Gerrit Sarens
This paper aims to recognise the importance of informal processes within corporate governance and complement existing research in this area by investigating factors associated…
Abstract
Purpose
This paper aims to recognise the importance of informal processes within corporate governance and complement existing research in this area by investigating factors associated with the existence of informal interactions between audit committees and internal audit functions and in providing directions for future research.
Design/methodology/approach
To examine the existence and drivers of informal interactions between audit committees and internal audit functions, this paper relies on a questionnaire survey of chief audit executives (CAEs) in the UK from listed and non‐listed, as well as financial and non‐financial, companies. While prior qualitative research suggests that informal interactions do take place, most of the evidence is based on particular organisational setting or on a very small range of interviews. The use of a questionnaire enabled the examination of the existence of internal interactions across a relatively larger number of entities.
Findings
The paper finds evidence of audit committees and internal audit functions engaging in informal interactions in addition to formal pre‐scheduled regular meetings. Informal interactions complement formal meetings with the audit committee and as such represent additional opportunities for the audit committees to monitor internal audit functions. Audit committees' informal interactions are significantly and positively associated with audit committee independence, audit chair's knowledge and experience, and internal audit quality.
Originality/value
The results demonstrate the importance of the background of the audit committee chair for the effectiveness of the governance process. This is possibly the first paper to examine the relationship between audit committee quality and internal audit, on the existence and driver of informal interactions. Policy makers should recognize that in addition to formal mechanisms, informal processes, such as communication outside of formal pre‐scheduled meetings, play a significant role in corporate governance.
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Nishaal Prasad, David Hay and Li Chen
The purpose of this study is to examine the effect of internal audit function (IAF) use on earnings quality and external audit fees using empirical data collected from the New…
Abstract
Purpose
The purpose of this study is to examine the effect of internal audit function (IAF) use on earnings quality and external audit fees using empirical data collected from the New Zealand (NZ) setting.
Design/methodology/approach
Applying institutional theory as the underlying framework, this study examines an IAF’s ability to demonstrate legitimacy, which will shed light to the functions long-term survival. Using a unique data set from the NZ setting, which combines information obtained from “The Institute of Internal Auditors of New Zealand” with empirical firm data collected from publicly available sources, multivariate analysis is performed to test the prediction that IAF use is associated with earnings quality, measured using discretionary accruals, and external audit fees.
Findings
There is strong positive association between IAF use and external audit fees, which supports the complementary controls view, where better internal controls increase audit fees by increasing the demand for scope of external audit work. The authors find no significant relationship between IAF use and earnings quality, which is not entirely surprising.
Research limitations/implications
The aim is to empirically test the IAF value proposition and to delve deeper into the black box of IAF value drivers. Given the size of the NZ economy and limitations of data availability, total sample size used in this study is relatively modest. However, the analysis does yield significant results. Apart from academic contribution to knowledge, this study offers a profound list of practical contributions. Practitioners will be interested to learn about the IAF value proposition from an empirical viewpoint. Senior management (SM) will obtain value from the outcomes when contemplating IAF investment and sourcing decisions. Regulators will be inherently interested in whether IAFs should be mandated.
Originality/value
The aim is to empirically test IAF value proposition and to delve deeper into the black box of IAF value drivers. To the best of the authors’ knowledge, this is the first NZ-based academic investigation which examines the relationship between IAF use and earnings quality. Apart from academic contribution to knowledge, this study offers a profound list of practical contributions. Practitioners will be interested to learn about the IAF value proposition from an empirical viewpoint. SM will obtain value from the outcomes when contemplating IAF investment and sourcing decisions. Regulators will be inherently interested in whether IAFs should be mandated.
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Samuel Jebaraj Benjamin and Mazlina Mat Zain
This paper aims to furnish incremental insights on dividends and corporate governance (CG) by addressing the relationship between board meeting frequency and board independence…
Abstract
Purpose
This paper aims to furnish incremental insights on dividends and corporate governance (CG) by addressing the relationship between board meeting frequency and board independence with dividend payout. In particular, this study aims to investigate whether CG attributes are substitutes to control agency problem within the Malaysian context.
Design/methodology/approach
This paper examines panel data on a sample of 114 Malaysian firms (798 observations) for seven years from 2002 to 2008.
Findings
Based on 798 firm-year observations for the period from 2002 to 2008, the results show significant negative relationship between CG (board independence, board meeting frequency) and dividend payout. This suggests that CG and dividend payout are substitutes in reducing agency costs. Our study provides empirical evidence consistent with the “substitution argument”, indicating that firms with weak CG need to establish reputation by paying more dividends. Specifically, the findings indicate that firms with a higher proportion of independent directors and boards of director that meet more frequent pay lower dividends.
Originality/value
This paper provides evidence on previously untested governance characteristics in relation to how they act as substitute mechanisms with dividends for reducing agency costs. The results builds a strong case for the fresh strand of knowledge on dividends and CG which tests each CG variables to understand each of its unique relationship with dividends in line with the dividends outcome or substitute theory.
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Hairul Azlan Annuar and Hafiz Majdi Abdul Rashid
The purpose of this study is to ascertain the control role of independent non-executive directors (INEDs) in Malaysian public listed companies (PLCs), as prescribed in the…
Abstract
Purpose
The purpose of this study is to ascertain the control role of independent non-executive directors (INEDs) in Malaysian public listed companies (PLCs), as prescribed in the Malaysian Code on Corporate Governance (MCCG).The MCCG (2000) requires substantive involvement of INEDs on the audit, nomination and remuneration board sub-committees. The study also examines the effectiveness of INEDs in discharging their monitoring roles in these sub-committees.
Design/methodology/approach
A qualitative research design consisting of a series of interviews with board members of Malaysian-owned PLCs on the board of Bursa Malaysia was used.
Findings
Interviews with 27 company directors reveal that, due to their independence, INEDs are crucial in safeguarding the interests of smaller investors if situations arise in which shareholders’ interests may be threatened. The interviews also disclose that the audit committee possesses the most authority among the sub-committees, as it derives its power not only from the Listing Requirements but also from statute, as well as being involved in areas of the company not traditionally associated with the committee. The study also reveals the differences in opinion between executive directors and INEDs with regard to the extent of INEDs’ effectiveness.
Research limitations/implications
This research utilises interviews. Generalisation may be an issue when interviews are used as the method of inquiry. In addition, the sample is not random, as access to many directors is dependent on recommendations. In addition, the respondents have been consciously selected to cover various board positions, including independent and non-independent directors.
Practical implications
The findings from this research suggest that INEDs are able to discharge their responsibilities in overseeing the conduct of executives and protecting the interests of investors. In addition, the interviews disclose that the effectiveness of INEDs depends on how non-executive directors view INEDs being on the board. Rather than focusing solely on their control role, INEDS are expected to have a more proactive and progressive role in ensuring sustainable growth and the expansion of the business entity.
Originality/value
There are limited studies using qualitative research design in investigating the effectiveness of INEDs in the control role of the board in developing countries. Prior studies were predominantly based upon the experience of Western economies.
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Siti Nur Syamimi Mohd Na’im, Mohd Fadhil Md Din, Santhana Krishnan, Shazwin Mat Taib and Fadzlin Md Sairan
Sustainable recycling activities in higher education institutions (HEIs) are crucial as it serves as a common benchmark to a community that is socially and environmentally…
Abstract
Sustainable recycling activities in higher education institutions (HEIs) are crucial as it serves as a common benchmark to a community that is socially and environmentally responsible. This chapter presents a suitable case study of HEIs in Malaysia reporting on recycling rate, monitoring the recycling patterns, and matching the significant recycling policy in the HEIs. Therefore, four HEIs including Universiti Teknologi Malaysia (UTM), Universiti Malaya (UM), Universiti Kebangsaan Malaysia (UKM) and Universiti Putra Malaysia (UPM) were selected as the suitable case studies to examine the practices of recycling activities. These four HEIs are Malaysian research universities that are ranked in the top 300 in the UI Green Metric World University Rankings. Several findings and previous works were reviewed; further steps to set a recycling target were identified and served as a guidance of the standard recycling rate. Results showed the selected HEIs reflected the low percentage of recycling rate in the range of 0.03–29.26%, depending on its practices and policy. Three phases of planning have been structured to target the recycling rate at HEIs in Malaysia with the First Plan (2025), Second Plan (2035) and Third Plan (2040) towards the recycling rates of 20%, 30% and 40%, respectively. The recommendations for the HEIs formulate recycling policies and recycling rates, and for waste management, academia and research centres to play a more active role in increasing the efficiency of recycling activities for a positive impact on the recycling rate in HEIs.
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Yang Tian, Tak Jie Chan, Tze Wei Liew, Ming Hui Chen and Huan Na Liu
Electronic wallets (e-wallet) systems have revolutionized transactional activities, prompting individuals to adopt digital payment methods. This study investigates the…
Abstract
Purpose
Electronic wallets (e-wallet) systems have revolutionized transactional activities, prompting individuals to adopt digital payment methods. This study investigates the determinants of the continuance intention of the e-wallet system Touch 'n Go in Malaysia. We propose a framework integrating the diffusion of innovation theory (DOI) and mental accounting theory, thereby assessing the impacts of product-related factors (convenience, compatibility, perceived risk and perceived compatibility) and the moderating role of personal-related factors [personal innovativeness (PI) and personal anxiety].
Design/methodology/approach
Data were collected involving 381 Malaysian Touch 'n Go users. The partial least squares structural equation modeling (PLS-SEM) was applied as a data analysis technique.
Findings
As demonstrated by the results, convenience serves as a facilitator, while perceived risk acts as an inhibitor, influencing the continuance intention of the application. Compatibility and perceived complexity are found to be insignificant antecedents. However, neither PI nor personal anxiety was found as moderators.
Originality/value
This research brings contributions to the electronic commerce literature by extending the understanding of the predictors and moderators of the continuance intention of Touch 'n Go users in Malaysia. We discuss how these findings implicate the two theories and offer insights for service providers and policymakers to promote the post-adoption intentions of Touch 'n Go.
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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.