Graduate employability among low academic achievers

This study aims to provide insights on how and why a specialised training programme could help graduates with low performance to compete fairly in the job market. This study used an action research design, where a total of 12 graduates with low academic achievement were trained under a specialised training programme consisting of two phases within the period of ten months. Despite having low academic achievements in terms of Cumulative Grade Point Average (CGPA), the employability opportunities of those graduates were high as they were equipped with the highly sought after GST knowledge and certification and various important soft skills such as time management, communication, analytical skills and leadership. This study demonstrated that engaging graduates in a specially designed program that aimed to enhance their technical knowledge and soft skills coupled with some work experience is indeed a value added strategy to enhance graduates employability. This is particularly applicable to those who are low achievers as it provides them with some kind of competitive advantages. The findings suggest that despite having low CGPA, their employability opportunities, particularly in the accounting and commercial industries, were relatively high. This study provides some guidance to policymakers and educators on how universities and industries may collaborate to mitigate unemployment issues among the accounting graduates

Corporate boards and performance pricing in private debt contracts

This paper investigates the effects of corporate governance on the use of performance pricing in debt contracts on a sample of newly syndicated loans in the U.S. private debt market. While cross-sectional results provide no evidence for the predicted relation between corporate governance quality and the likelihood of using performance pricing in debt contracts, there is evidence for the predicted positive relation between corporate governance quality and the use of interest-increasing performance pricing provisions. Evidence also provides support for the predicted negative relation between corporate governance quality and the use of financial ratio as the measure of performance underlying the provisions. Overall, empirical evidence supports the hypothesis that debt-holders perceive aspects of corporate governance to be beneficial and factor them in their contracting decisions

Corporate governance, covenants restrictiveness and performance pricing in private debt contracts

ABSTRACT: This thesis examines the association between corporate governance and the restrictiveness of covenants used in U.S. private debt contracts. Both corporate governance and covenants have been shown to play a role in mitigating agency problems associated with debt. Given their similar monitoring roles, a relationship is expected between these two monitoring mechanisms. Accordingly, it is argued that, ceteris paribus, firms with stronger corporate governance will be perceived by debtholders to be less likely to engage in ex-post opportunism thereby reducing the need to use particularly restrictive covenants. The quality of corporate governance is measured using both a governance index score as well as specific board characteristics such as board independence, directors’ expertise, busyness of directors and CEO duality. Unlike previous research which measures covenants restrictiveness based on rather broad benchmarks such as covenant number and/or an intensity index, this thesis measures restrictiveness based on the tightness of the thresholds around the covenant as proxied by slack. In addition, the thesis investigates the relation between corporate governance and performance pricing, a relatively new contractual feature often included in private debt contracts, in conjunction with covenants. Results from the cross-sectional analysis on a sample of 211 new syndicated loans in the U.S private debt market for the year 2006, indicate that both corporate governance index score and board independence are positively and significantly associated with covenant slack. Similarly, independent directors’ financial expertise and covenants slack are positively related, but there is no evidence to suggest that slack is associated with ‘busy’ directors or CEO duality. There is also no evidence for the predicted relation between corporate governance quality and the likelihood of using performance pricing in debt contracts, but there is a positive relation between corporate governance quality and the use of interest-increasing performance pricing provisions as well as a negative relation between corporate governance quality and the use of a financial ratio as the measure of performance underlying the provisions. Overall, empirical evidence supports the hypothesis that debtholders perceive aspects of corporate governance to be beneficial and it appears they factor them in their contracting decisions. This thesis contributes to the extant literature on the determinants of covenants and performance pricing by providing useful guidance for designing debt contractual terms. Optimally designed contractual terms facilitate effective debt contracting arrangements, thereby leading to a reduction in costs of debt. Since debt represents a major source of funds for most firms, it potentially will have a significant effect on the cost of capital. This thesis is important and useful to both firms and debtholders as it provides valuable insights in dealing with the agency problems associated with debt in more efficient and cost-effective ways

The impact of corporate governance on the restrictiveness of covenants in private debt contract

We examine the association between corporate governance and the restrictiveness of covenants used in U.S. private debt contracts. Both corporate governance and covenants have been shown to play a role in mitigating agency problems associated with debt, hence a relationship is expected between these two monitoring mechanisms. Accordingly we argue that, ceteris paribus, firms with stronger corporate governance will be perceived by debtholders to be less likely to engage in ex-post opportunism thereby reducing the need to use particularly restrictive covenants. Our cross-sectional analysis on a sample of new syndicated loans in the U.S private debt market indicates that both a corporate governance score and board independence are positively and significantly associated with covenant slack. Similarly, we find that independent directors’ financial expertise and covenants slack are positively related, but we find no evidence that slack is associated with ‘busy’ directors or CEO duality. Overall, the empirical evidence supports the hypothesis that debtholders perceive aspects of corporate governance to be beneficial and factor them in to their contracting decisions

Corporate Governance and Covenants Restrictiveness in Private Debt Contract

Both corporate governance and covenants separately have been shown to play a role in mitigating agency problems associated with debt. Accordingly, we examine the association between corporate governance and the restrictiveness of covenants on a sample of newly syndicated loans in the U.S. private debt market. Cross-sectional results support the argument that, ceteris paribus, firms with stronger corporate governance are perceived by debtholders as less likely to engage in ex post opportunism, thereby reducing the need for particularly restrictive covenants. More specifically, the results indicate that both a corporate governance score and board independence are positively and significantly associated with covenant slack. While the results also show that independent directors’ financial expertise and covenant slack are positively related, there is no evidence to suggest that slack is associated with “busy” directors or CEO duality. Overall, the empirical evidence supports the hypothesis that debtholders perceive aspects of corporate governance to be beneficial and factor them into their contracting decisions

Exploring the motives of appointing independent directors

The aim of this study is to examine the views of chairman and members of nomination committee on motives in appointing an independent director in Malaysian public listed companies. Semi-structured interview was used and 21 directors were interviewed. The results indicate that independent directors were expected to execute their monitoring role, exercise unbiased judgment in questioning decisions made and safeguard balance of power between the board and management. In addition, the respondents believe that independent director should utilize their capacity from related background, expertise and experience in board meeting discussion in addressing issues or risks and making relevant suggestions

Takaful reporting on IFSB requirements in Malaysia: users and preparers perspective

Bank Negara Malaysia (2014) mentioned the importance of having meaningful disclosure to protect participants. However, it did not provide details of the elements of meaningful disclosure. There is no specific guidelines or standards of what should be reported and how detailed the items should be reported. Takaful operators have more knowledge in the operational aspect of takaful, compared to the participants. Authorities try to harmonise all the possible variations and gaps between takaful operators (preparers) and participants (users) for the benefit of the industry. Any gap between what is expected to be reported (desirable) and what is actually reported needs to be analysed in order to provide more information relevant to the users and to standardise the disclosure level. By adopting Sulaiman’s (2005) framework, the study determines what users and preparers perceive as meaningful disclosure on the Islamic Financial Services Board (IFSB) standards. The first two objectives of the study are to determine the disclosure perspectives of the two parties while the third objective is to examine if gaps exist between the two stakeholders. Questionnaire was distributed to takaful agents to examine their perception while content analysis was employed to evaluate the actual level of disclosure in takaful operators' websites. The gap analysis was conducted between the desired and actual level of disclosure and found significant differences among all the gaps. Additionally, the average level of disclosure is 44%. It is hoped that the findings will assist authorities in formulating guideline in takaful industry in Malaysia

Malaysian takaful reporting from a maqasid shariah perspective

The concept and goals of takaful are based on the objectives of Islamic law, which are centred on the five dimensions of maqasid Shariah that are essential to the life of a Muslim. The application of takaful in the Muslim community appears to have a significant relationship with the attainment of Shariah objectives. The study intends to investigate the extent of Takaful reporting in Malaysia and its relationship to maqasid shariah. The disclosure index was created using the three perspectives of Islamic accountability (Shariah, social, and financial) as well as takaful-specific information. The checklist items consist of 124 items: 67 mandatory items and 57 voluntary items. These items are classified as financial reporting; Shariah compliance and governance; corporate governance; takaful policy requirements; Family Takaful; takaful undertaking solvency requirements; risks and enterprise risk management. Takaful operators disclosed 95% of the total mandatory disclosure on average. In terms of voluntary disclosure, takaful operators disclosed 38% of total voluntary disclosure. All mandatory items are fundamental or essential (daruriyat), and takaful operators are expected to have a high level of disclosure, whereas voluntary disclosure items such as general needs information (hajiyat) and refinement information (tahsiniyat) have a lower level of disclosure

Exploring the motives of appointing independent directors

The aim of this study is to examine the views of chairman and members of nomination committee on motives in appointing an independent director in Malaysian public listed companies. Semi-structured interview was used and 21 directors were interviewed. The results indicate that independent directors were expected to execute their monitoring role, exercise unbiased judgment in questioning decisions made and safeguard balance of power between the board and management. In addition, the respondents believe that independent director should utilize their capacity from related background, expertise and experience in board meeting discussion in addressing issues or risks and making relevant suggestions

The appointment process of independent directors in Malaysian listed companies

This study examines the appointment process for independent directors in public listed companies (PLCs) in Malaysia. To this end, open-ended interviews were conducted with chairmen of nomination committees of PLCs in Malaysia in order to understand the appointment process. The results revealed that nominations may come from various sources, including from the firm’s board members, CEO or owners. It was also found that the nominees are those within the personal network of the board members, CEO or owners. The main reason given was to shorten the appointment process and also because they knew the candidates personally. In terms of the selection criteria, the personal qualities of a candidate were found to be very important. In particular, the board puts emphasis on experience, expertise, professional qualifications, and reputation to identify a candidate who can commit to their tasks. However, the board does not consider race, religion, and gender as important selection criteria. Our findings reveal that it is the board that makes the final decision on the appointment or reappointment of independent directors. Based on our findings, we conclude that nominations for independent directorships mainly come from inside the firms and those nominated are within their networks. In other words, the independent directors are known or connected either to the board members, CEO or major shareholders. Hence, it would be very difficult for independent directors to perform a monitoring role as prescribed in agency theory. Rather, the independent directors are appointed to the board primarily to play a service role, consistent with resource dependency theory. The fact that firms prefer professionals with experience indicates that candidates for independent directorships are appointed because of their expertise and their service role