Islamic Calendar Anomalies: Pakistani Practitioners' Perspective

Studies on Islamic calendar anomalies in financial markets tend to apply quantitative analysis to historic share prices. Surprisingly, there is a lack of research investigating whether the participants of such markets are aware of these anomalies and whether these anomalies affect their investment practice. Or is it a case that these practitioners are completely unaware of the anomalies present in these markets and are missing out on profitable opportunities? The purpose of this paper is to analyse the views of influential participants within the Pakistani stock market

Fair value accounting: Perspective on stewardship function

This paper reviews the existing and emerging perspectives on fair value accounting (FVA) in the context of the stewardship function of financial reporting. This study draws on diverse research threads and theoretical notions to advance a comprehensive assessment of existing FVA research in the context of the trade-off between decision-usefulness and the stewardship objective. By conducting a narrative literature review, the authors identify two distinct domains of literature: FVA- a result of a conceptual shift in financial reporting; and FVA- an enhancement of decision-usefulness in general-purpose financial reporting. This study posits that FVA can be considered as an evolutionary, rather than revolutionary, development in financial reporting measurement which emerged from financialisation and globalisation of economies. It is further suggested that the ability of FVA to provide stewardship-relevant information may be reduced due to the emphasis it places on the provision of decision-useful information for investment purposes. Therefore, the authors call for a greater engagement between policy-setters and researchers when choosing conceptual underpinnings for financial measurement objectives

Corporate Strategy, Political Contributions and Corporate Risk-Taking

Purpose: Despite the importance and prevalence of corporate political activities in modern organizations, there remains limited insights on the potential relationship between political contributions and companies risk-taking activities. This study examines the relationship between monetary political contributions of firms and corporate risk-taking activities in the context of unstable political and economic environments. Design/methodology/approach: We employ a two-step system GMM estimation to investigate the subject using a cross-country sample of 307 firms from 22 countries covered over 2002–2017. In line with the previous studies, we control for various corporate governance mechanisms, firm-level factors and country-level characteristics. Findings: The findings demonstrate that firms that make monetary political contributions exhibit lower levels of risk as measured by different proxies for risks, namely, systematic, idiosyncratic and total risk. Practical implications: The results suggest that political contributions can be a useful mechanism to mitigate risk exposure. Also, the use of different risk measures and other factors for robustness fosters a better understanding of political connectedness in a more contextualized and dynamic manner. Originality: The current study seeks to contribute to the debate surrounding corporate strategy, political connectedness and corporate risk taking by using actual monetary political contributions as an explicit measure of political connection. The present study furthers scholarly understanding on the dynamics of corporate political activities using political contributions in monetary terms as a measure of political connectedness and its impact on risktaking. Furthermore, we explore this topic using insights from nonmarket strategy literature and studies on political contributions

Compliance or non‐compliance during financial crisis: Does it matter?

This paper investigates whether shareholder value is affected by non‐compliance with the prescriptions of a principle‐based ‘comply or explain’ system of corporate governance in the context of the global financial crisis of 2007–2009. Using System Generalized Method of Moments estimates to control for different types of endogeneity, the main findings of this paper suggest that non‐compliance with the UK Corporate Governance Code adversely affects shareholder value. Furthermore, ex‐post estimates reveal that compliance with certain corporate governance mechanisms is more beneficial than others. With regard to this, compliance with provisions related to board independence is more important than complying with performance‐related pay requirements of the code. These findings have implications for policy makers and financial institutions regarding the usefulness of compliance with a prescribed code of corporate governance, specifically during periods of financial distress

Taking advantage of Ramadan and January in Muslim countries

Studies have shown that religious beliefs and practice play an important role in influencing share price behaviour. Evidence of a Ramadan effect has been documented in Muslim countries suggesting an increase in mean returns as well as a reduction in volatility during the ninth month of the Islamic calendar. In addition to the Ramadan effect, studies have also documented a January effect in Muslim countries. The current study investigates what happens when the Ramadan effect and the January effect occur at the same time. Controlling for the effects of financial crises and time-varying volatility in returns, the results for individual company data from four countries with sizeable Muslim populations indicate higher returns and lower volatility when these two effects overlap, except in one, arguably more Western country, Turkey

East meets west: when the Islamic and Gregorian calendars coincide

Recent research has documented that at the time of religious celebrations in Muslim countries, such as Ramadan, there is a “festival” effect in share returns. In the Gregorian calendar, December is also a time of celebration and festivities which may be associated with patterns in the behaviour of security prices. Further, the first month of the year in the Islamic calendar, Muharram, is a time of sadness and mourning for some believers, and there may be an effect when the Islamic first month of the year overlaps with the first month of the Gregorian year - January. Over a 33-year cycle, each Islamic month falls in a Gregorian month for about 5–6 consecutive years; when this happens, an Islamic (Eastern) calendar effect may interact with a Gregorian (Western) calendar effect. The current paper addresses this issue by examining the behaviour of share returns and volatility for individual companies listed in Muslim countries’ stock exchanges when the two calendars coincide for: (i) religious festival effects; (ii) first-month-of-the-year effects; and (iii) the two most common effects reported in the Islamic and Gregorian calendars (Ramadan and January). The results show that the Western and Eastern effects interact more prominently in larger companies and in larger or more developed markets

More sustainable universities in a post-COVID world?

September 2020 marks the fifth anniversary of the launch of the UN Sustainable Development Goals (SDGs). Dr Anwar Halari, a Lecturer in Accounting in the OU Business School, explores what COVID-19 means for universities' sustainability plan