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Article
Publication date: 10 November 2020

Mukhammadfoik Bakhadirov, Zakir Pashayev and Omar Farooq

The paper answers the following questions: (1) Do firms located in rural areas experience greater problems in accessing financial services? (2) If this is the case, what can these…

278

Abstract

Purpose

The paper answers the following questions: (1) Do firms located in rural areas experience greater problems in accessing financial services? (2) If this is the case, what can these firms do to improve their access to finance?

Design/methodology/approach

This paper uses the pooled logistic regression and the data collected by the World Bank's Enterprise Surveys during the period between 2008 and 2018 to answer the aforementioned questions.

Findings

The results of this paper show that firms headquartered in rural (urban) areas experience greater (lower) problems in accessing finance than other firms. This paper attributes these findings to higher (lower) levels of information asymmetry and lower (higher) levels of density of banking operations in rural (urban) areas. The results of this paper also show that firms headquartered in rural areas can improve their access to finance by increasing the skill levels of their employees.

Originality/value

This paper highlights the actions that rural firms can undertake to overcome the adverse impact of their geographic location.

Details

Review of Behavioral Finance, vol. 14 no. 2
Type: Research Article
ISSN: 1940-5979

Keywords

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Article
Publication date: 28 January 2020

Omar Farooq and Zakir Pashayev

This paper aims to document the information transmission capacity of Shariah-compliant firms.

210

Abstract

Purpose

This paper aims to document the information transmission capacity of Shariah-compliant firms.

Design/methodology/approach

The vector auto-regression (VAR) model is used to test the information transmission capacity of Shariah-compliant firms in India during the period between 2010 and 2015.

Findings

The findings show that the returns of non-Shariah-compliant firms lead the returns of Shariah-compliant firms. It is argued that non-Shariah-compliant firms possess certain financial characteristics (higher leverage, higher accounts receivable and higher cash holdings) that make their information environment better than information environment of Shariah-compliant firms. The authors argue that superior information environment leads to timely incorporation of market-wide information, thereby causing the returns of non-Shariah-compliant firms to lead the returns of Shariah-compliant firms. It is also shown that the result holds in various market conditions.

Originality/value

It is believed that prior literature does not adequately address the information transmission capacity of the stock prices of Shariah-compliant firms. The gap is filled by documenting that stock prices of Shariah-compliant firms that are more informative than stock prices of non-Shariah-compliant firms.

Details

Journal of Islamic Accounting and Business Research, vol. 11 no. 8
Type: Research Article
ISSN: 1759-0817

Keywords

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Article
Publication date: 5 May 2020

Omar Farooq and Zakir Pashayev

This paper documents the impact of product market competition on the value of advertising expenditures.

443

Abstract

Purpose

This paper documents the impact of product market competition on the value of advertising expenditures.

Design/methodology/approach

The authors use the data for non-financial firms from India and the pooled regression procedure to test their arguments during the period between 2009 and 2018.

Findings

The results show that advertising expenditures of firms operating in sectors with relatively high competition are more valuable than advertising expenditures of firms operating in sectors with relatively low competition. The results of the study are robust across various proxies of advertising expenditures and firm performance. Furthermore, the results also show that the positive impact of product market competition on the value of advertising expenditures is confined only to firms that already have lower agency problems.

Originality/value

The results of the study highlight the importance of product market competition on the value of advertising expenditure in the emerging market setting, where agency problems are supposed to be high.

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