Social and Environmental Disclosure in Saudi Companies

There is a growth in demand by stakeholders for companies to demonstrate greater transparency on their social and environmental performance. Few studies have been conducted in Saudi Arabia on the area of voluntary disclosure. The present study aims to evaluate the current level of social and environmental disclosure (SED) and to investigate the influence of the variables (size, industry, sector, age, capital raised, and audit firm size) on the general level of social and environmental disclosure in the nonfinancial companies in Saudi Stock Market (SSM). The disclosure index is constructed of 25 items to evaluate the level of disclosure in the 2008 annual reports of all the 93 nonfinancial companies in Saudi Stock Market. The relationships between the disclosure level of the six variables are investigated using ordinary least square regression model. Results show that the level of social and environmental disclosure level is very low for Saudi nonfinancial listed companies. Company size and sector are found to be significantly associated with the level of disclosure. However, the remaining variables are not significantly correlated with disclosure level. This study makes a positive contribution to enhance general knowledge of SED practices and can help Saudi authorities to enforce new policies toward social and environmental reporting

The moderating effects of governance on the relationship between investment opportunites, leverage and ownership indentity with firm performance in the UAE

This study evaluates corporate governance practices of listed firms in the UAE and examines the hypothesized influence of investment opportunities, leverage, foreign and institutional ownership on firm performance. Corporate governance strength is also investigated as a moderator between investment opportunities, leverage, foreign, institutional ownership and firm performance. The moderating impact of corporate governance strength is also examined during the global financial crisis. After constructing an index to measure corporate governance strength, the fixed effects regression in panel data was used to analyze the data. The data included 101 firms with a total of 501 firm-year observations that spanned the period 2008 to 2012, of all the firms listed on the Abu Dhabi Stock Exchange and the Dubai Financial Market. The results show a significant influence of investment opportunities, leverage and institutional ownership on firm performance represented by Return on Assets (ROA) and Refined Economic Value Added (REVA). However, the results find no influence of foreign ownership on ROA, and a negative influence on REVA. The governance index shows a dramatic improvement in the corporate governance practices over time. In addition, corporate governance strength is found to significantly moderate the relationship between investment opportunities, leverage, foreign and institutional ownership with ROA, but only moderates the relationship between leverage and REVA. During the crisis, corporate governance strength appears to play a more efficient moderating role. The findings of this study provide some insights to the regulators and other related parties about the status of corporate governance practices in the UAE and show that good corporate governance is indirectly able to improve the performance of firms during different time periods

The impact of board independence and foreign ownership on financial and social performance of firms: evidence from the UAE

Purpose: This study examines the impact of two different types of foreign ownership—by Arab and non-Arab investors on firms' financial and social performance. It then goes on to investigate how the degree of board independence affects the aforementioned relationship between these two types of foreign investors on firm performance. Design/methodology/approach: The sample for the study is a panel of all listed firms in the Dubai Financial Market (DFM) and the Abu Dhabi Securities exchange (ADX) from 2008 to 2012. Findings: Results indicate that while Arab foreign ownership affects firms' financial and social performance negatively, non-Arab foreign ownership does so, positively. Further tests indicate that board independence weakens the negative relationship between firm financial and social performance with foreign Arab ownership and deteriorate the relationship between firm financial and social performance and non-Arab foreign ownership. Research limitations/implications: Future studies may extend the coverage of the study by including other countries in the region and other identities of the foreign investors. Practical implications: This study may help policy makers in the UAE to improve the implementation and enforcement of existing regulations concerning corporate social responsibility (CSR) and board independence. It also highlights the need to look into the monitoring role of independent board members. Originality/value: This is the first study to examine the role of board independence on the relationship between foreign ownership and firm's financial and social performance. To the best of our knowledge, this is the first paper that attempts to enrich the understanding of foreign ownership by classifying it into Arab versus non-Arab

Investment opportunities, corporate governance quality, and firm performance in the UAE

Purpose – This paper examines the influence of investment opportunities on firm performance and evaluates corporate governance practices in the United Arab Emirates (UAE) to determine whether corporate governance quality moderates that influence. Design/methodology/approach – A fixed-effects regression was employed to examine the influence of investment opportunities on firm performance and the role of corporate governance quality as a moderator forall listed firms on the Abu Dhabi Stock Exchange (ADX) and the Dubai Financial Market (DFM). We examined 501 firm-year observations for the period when the corporate governance code in the UAE was coming into force, from 2008 to 2012. Findings – The regression results indicate that investment opportunities have a negative influence on firm performance. The corporate governance index used here shows that the level of corporate governance practiced in the UAE is weak. We also find that strong corporate governance ameliorates the negative influence of investment opportunities, which supports our hypotheses. The sub-indices of corporate governance that matter the most for moderating investment opportunities are board functioning and ethics.Practical implications – The results of this paper reflect the need to examine corporate governance in the context of the external environment represented by investment opportunities in our study. The findings could raise awareness of the importance of strong corporate governance practices, not only to directly improve firm performance but also through its influence on external variables. Legislators, regulators and other interested parties could use these results to examine practices in the UAE following the implementation of the corporate governance code.Originality/value – This study contributes to the literature by evaluating the role that corporate governance quality and its components could play in firm performance and indirectly moderating other external factors (such as investment opportunities)

Tax havens and transfer pricing intensity: Evidence from the French CAC-40 listed firms

International audienceMultinational enterprises (MNEs) may use transfer pricing techniques andpolicies to reduce their tax base in higher-tax rate jurisdictions by shifting it tolower-tax rate countries or tax havens. These practices, enhanced by the globali-zation and dematerialization of the economy, have flourished and became a majorissue for supranational organizations, tax authorities and even in the public opinion.This study analyses the impact of intangible assets, firm size, effective tax rate, andleverage on transfer pricing intensity. French publicly listed firms in the CAC-40 were examined during the period from 2012 to 2015. The regression results show thatthe firm size and leverage are positively associated while intangible assets andeffective tax rate are negatively associated with transfer pricing intensity

Are audit committee characteristics important to the internal audit budget in Malaysian firms

An audit committee is viewed as an essential self-regulatory internal governance instrument that is expected to provide an oversight role over the entire process of financial reporting. An internal audit is also one of the corporate governance cornerstones that is essential for the effective monitoring of the operating performance of internal control. To ensure its effectiveness, the audit committee monitors the resources available to the internal audit, and internal control functions should be directly reported to the audit committee. This study analyses the effect of audit committee characteristics on internal audit budget in Malaysia, where data on internal audit budget is available and how well audit committee monitors the internal audit function is questionable. Our study also opens the door to an unanswered question, that is, whether an audit committee index is related to internal audit budget. Data of 96 companies listed on Bursa Malaysia for a three-year period, 2012-2014, was utilized to achieve this end. The regression results show that audit committee meeting and index are significantly and positively associated with internal audit budget. They also indicate that audit committee tenure has a significant and negative impact on internal audit budget. The findings of the study support the recent policy initiatives in relation to audit committee and internal audit. They also serve as a wake-up call to policy makers in requiring more committed and skilled members on the audit committee.Un comité de auditoría es visto como un instrumento de gobierno interno de autorregulación esencial que se espera que proporcione un rol de supervisión durante todo el proceso de información financiera. Una auditoría interna es también una de las piedras angulares de gobierno corporativo que es esencial para el monitoreo efectivo del desempeño operativo del control interno. Para garantizar su eficacia, el comité de auditoría supervisa los recursos disponibles para la auditoría interna, y las funciones de control interno deben informarse directamente al comité de auditoría. Este estudio se propone analizar el efecto de las características del comité de auditoría en el presupuesto de auditoría interna en Malasia, donde los datos sobre el presupuesto de auditoría interna están disponibles y qué tan bien supervisa el comité de auditoría la función de auditoría interna es cuestionable. Nuestro estudio también abre la puerta a una pregunta sin respuesta, es decir, si un índice de comité de auditoría está relacionado con el presupuesto de auditoría interna. Los datos de 96 compañías enumeradas en Bursa Malaysia por un período de tres años, 2012-2014, se utilizaron para lograr este fin. Los resultados de la regresión muestran que la reunión y el índice del comité de auditoría están significativamente y positivamente asociados con el presupuesto de la auditoría interna. También indican que la tenencia del comité de auditoría tiene un impacto significativo y negativo en el presupuesto de auditoría interna. Los hallazgos del estudio respaldan las recientes iniciativas de política en relación con el comité de auditoría y la auditoría interna. También sirven como una llamada de atención para los responsables de las políticas al requerir miembros más comprometidos y capacitados en el comité de auditorí

An overview of share buybacks: A descriptive case from Malaysia

International audienceThis paper reviews the trends and motivations of share buyback programs and highlights the different hypotheses that motivate companies to repurchase their shares. It then explores the share buyback phenomena among Malaysian listed firms during the years from 2010 to 2015. The paper also investigates whether the Malaysian listed firms use share buyback programs to manage their earnings. Based on our manually collected data, we find that 836 firms engage in share buybacks during the period from 2010 to 2015. We employ the criteria of Hribar et al. (2006) to check whether share buyback strategies were used to manipulate earnings per share (i.e. accretive share buyback). We find that more than 75% of firms engage in accretive share buybacks at least one time during the period. Specifically, those firms undertake 637 accretive share buybacks with a value of RM 7.650 billion. This paper contributes to a better understanding of share buyback strategies in general and accretive share buybacks in the Malaysian context. Finally, our findings provide a reference point for relevant parties to improve the applicable regulations of share buyback schemes

Corporate social responsibility and firm market performance: the role of product market competition and firm life cycle

Purpose- This study empirically investigates the role of product market competition and mature-stage firm life cycle on the relation between corporate social responsibility (CSR) and market performance in an emerging market context – Malaysia.
 Design/methodology/approach- The authors construct a comprehensive CSR index toward the economy, environment and society (EES) and apply both Ordinary Least Squares (OLS) and Two-Stage Least Squares (2SLS) instrumental variables (IV) approaches to test the hypotheses of the study.
 Findings- The authors find that EES-based CSR generally enhances firms' market performance; however, the level of product market competition undermines the market performance of socially and economically responsible firms. In addition, the study results indicate that mature-stage firm life cycle with more involvement in CSR activities shows better market performance. However, the endogeneity check of CSR suggests that both CSR and mature-stage firms are mutually exclusive in influencing market performance. The study findings are robust to alternative measures and different identifications of high and low default risk situations of sample firms.
 Practical implications- This study carries practical policy implications for the listed firms, regulators and stakeholders in general. For example, regulatory bodies may promote greater involvement in CSR activities by listed companies in the Malaysian stock market. Investors and other market participants should be aware of factors influencing socially responsible firms' market performance such as the corporate life cycle and the level of competition in product markets.
 Originality/value- This research work responds to the call of regulatory bodies in Malaysia at a time when the Malaysian economy is under threat of environmental distraction practices by the palm oil industry and import ban by the largest export market, i.e. the European Union by 2030. The study also contributes to the theoretical literature by refining the moderating role of product market competition and mature-stage life cycle on the relationship between CSR and market performance from the perspectives of resource-based and stakeholder theories in emerging economy settings

The role of corporate governance strength in crisis and non-crisis times

International audienceThis study evaluates corporate governance practices of listed firms in the United Arab Emirates and investigates whether corporate governance mitigates/exacerbates the impact of leverage and risk on firm performance during crisis and non-crisis times. The study constructs a corporate governance index not only to examine the dispute of the role of corporate governance during the crisis but also its influence on other factors that fuelled the crisis. A firm-level panel data is used that spans the period 2008–2012 of all listed firms on Abu Dhabi Securities Exchange (ADX) and Dubai Financial Market (DFM). The study finds a positive influence of corporate governance strength on the accounting performance, but a negative influence on the firms’ economic performance. In normal times, corporate governance mitigates the negative influence of leverage and risk on the accounting and economic firm performance. However, this synergy effect varies across performance indicators during crisis