Wealth effect and macroeconomics factors of a firm’s international merger and acquisition exercise: empirical evidence from multinational firms

The aim of this study is to examine the influence of macroeconomic factors on the wealth effects of international merger and acquisitions by Malaysian multinational companies (MNCs). There are three macroeconomics factors: foreign economic condition, gross national product (GNP) correlation between countries and the level of the economic development of a target country. A random sample of 165 international mergers and acquisitions by Malaysian bidding MNCs in 22 countries around the world in the period of 2000–2010 was recruited for this study. A negative relationship between the foreign economic condition and the wealth effect and a positive relationship between the level of economic development of target country and the wealth effect has been found through this study. This implies that the foreign economic condition and level of economic development of the target country significantly determine the value creation of the Malaysian cross-border acquisitions. Therefore, Malaysian MNCs, which intend to use the acquisition mode of entry as the way to venture abroad, should take into consideration these macroeconomic factors in order to increase their foreign investment value

Assessing the domestic and foreign Islamic banks efficiency: insights from selected Southeast Asian countries

The objective of this study is to examine the technical efficiency (TE) and the decomposition of pure technical efficiency (PTE) and scale efficiency (SE) of domestic and foreign Islamic banks from the selected Southeast Asian Countries. The sample comprised of 29 domestic and foreign Islamic banks from Malaysia, Indonesia and Brunei over the period of 2006–2014. This study employ the Data Envelopment Analysis (DEA) method to measure banks’ efficiency. In addition, the parametric (t-test) and non-parametric (Mann-Whitney [Wilcoxon] and Kruskall-Wallis) tests also performed to examine the difference in the efficiency of the foreign and domestic Islamic banks. The results indicate that the domestic Islamic banks have exhibited higher efficiency levels compared to their foreign bank peers. In addition, the empirical findings from this study seem to suggest that the domestic Islamic banks have exhibited a higher efficiency levels for all three efficiency measures and consistent with home field advantage theory. The findings of this study are expected to contribute significantly to the regulators or policymakers, Islamic banking itself, investors and existing knowledge on the operating performance of the Islamic banking sector

Does productivity of Islamic banks endure progress or regress?: empirical evidence using data envelopment analysis based Malmquist productivity index

Purpose: This paper aims to explore the level of productivity of Islamic banks specifically in selected Southeast Asian Countries from the period 2006 to 2014. Besides, this study also investigates the potential determinants of bank-specific characteristics and macroeconomic conditions that may influence the productivity of banking sector. Design/methodology/approach: The present study gathers data on the 29 Islamic banks from Southeast Asian countries, namely, Brunei, Indonesia and Malaysia. The productivity level of the Islamic banks is evaluated using the data envelopment analysis-based Malmquist productivity index method. The authors then used a panel regression analysis framework based on the ordinary least square to identify potential determinants. Findings: The domestic and foreign Islamic banks have exhibited progress in total factor productivity change solely attributed to the increase in efficiency change (EFFCH) which were mainly managerial rather than scale related. Foreign-owned banks have been slightly more productive compared to their domestic-owned bank counterparts, attributed to a higher EFFCH but insignificantly different. Furthermore, capitalisation, liquidity and world financial crisis determinants have significantly influenced productivity level of Islamic banks. Originality/value: The study on the productivity of Islamic banking is still in its formative stage. To date, very limited study has been conducted to examine the productivity level in Southeast Asian, which is a strong regional hub for Islamic banking. This study intends to fill the gaps with a specific focus on the productivity level, specifically narrowing down to Southeast Asian countries in the domestic and foreign Islamic banking sector

Impact of country’s governance dimensions on bank revenue efficiency: overview on middle east, Southeast Asia, and South Asia countries

This study attempts to discover the impact of the limitation of a country’s governance on Islamic and conventional bank revenue efficiency by using data from the countries of three regions. Non-parametric Data Envelopment Analysis (DEA) employed to measure the bank revenue efficiency level. The applied method of estimation consists of pooled Ordinary Least Square (OLS), Fixed Effect Model (FEM), Random Effect Model (REM), and the Generalized Method of Moments (GMM) to examine the impact of country governance and other potential determinants on bank efficiency. This study finds out that the dimensions of voice and accountability positively influenced Islamic and conventional bank revenue efficiency, however, the political stability and absence of violence and control of corruption provided the negative relationship. Furthermore, other dimensions of regulatory quality, government effectiveness and rule of law significantly negative with the conventional bank revenue efficiency. Implications from the study allow the related parties to identify the significant dimensions of a country’s governance to the efficiency of the banks to ensure better bank performance

Price efficiency on Islamic banks vs. conventional banks in Bahrain, UAE, Kuwait, Oman, Qatar and Saudi Arabia: impact of country governance

This research investigate the impact of six dimensions of country governance to the price efficiency of Islamic and conventional banks. The empirical analysis is focused on the Islamic and conventional banks operating in the Bahrain, UAE, Kuwait, Oman, Qatar and Saudi Arabia countries. The data envelopment analysis (DEA) method applied to compute the revenue efficiency of Islamic and conventional banks. Then used the Multivariate Panel Regression Analysis with the Ordinary Least Square as an estimation method to investigate the potential determinants and the effect of country governance on the revenue efficiency. The empirical findings indicate that greater voice and accountability, political stability, regulatory quality, rule of law and control of corruption enhance the revenue efficiency of both Islamic and conventional banks. The dimension of government effectiveness exerts positive sign relationship with the banks revenue efficiency only on conventional banks

Effect of moderating factors on value relevance of earnings information among pyramid structure firms in selected ASEAN countries

The objective of this study is to ascertain if the presence of institutional owner as second largest owner, the absence of CEO duality and the higher level of cash flow rights in the hand of ultimate owner, hereby referred to as moderating factors, help to improve the value relevance of earnings information in pyramid structure firms. The separation of cash flow rights and control rights in pyramid structure firms has entrenched the ultimate owner and provide them with opportunities to manipulate earnings information, which in turn reduce the value relevance of the earnings information reported. This study hypothesizes that the moderating factors identified will help to reduce the agency problem between ultimate owner and minority shareholder by reducing the opportunity of ultimate owner to manipulate earnings information, which in tum will increase the value relevance of earnings information in pyramid structure firms. The sample in this study consists of 153 pyramid structure firms from Malaysia, Indonesia, Thailand and Philippines, where the identity of the ultimate owner is family ownership and the firms were originally assembled by Claessens et al. (2002) from 1992 to1997. Earnings-return model with the interaction between earnings information reported by pyramid structure firms and moderating factors is provided to show the effect of the factors on the earnings-return relationship in an attempt to measure the value relevance of earnings information reported. Positive earnings-return relationship and higher R2 indicate that the earnings information is value relevant and vice versa. Using panel data regression, the results show that the presence of all proposed moderating factors is significant to minimize and mitigate the negative effects of the structure based on higher R2 reported with positive earnings-return relationship. Thus, the moderating factors moderate the negative effects of pyramid structure firms and help to increase the low value relevance of earnings information among pyramid structure firms

Association between disclosure quality and stock return with the moderating effects of corporate governance practices and ownership structure in Malaysia

This study is motivated by three main study by Beretta and Bozzolan (2008), Bozzolan et al., (2009) and Wang and Hussainey (2013). Nevertheless, this study will extend their studies by specifically look into the quality effect of forward looking disclosure, stock return of the firm and proposing two moderating factors, namely ownership structure and corporate governance practices. Thus, objectives of this study are to investigate whether or not the disclosure, disclosure level, and disclosure quality of forward-looking information will significantly affect stock return of the firm. This study also proposed two moderating factors, namely corporate governance practices and ownership structure of the firm to ascertain whether these moderating factors can either weaken or strengthen the relationship between the disclosure quality of forwardlooking information and stock return of the firm. The sample in this study consists of 300 Malaysian public listed firms with the highest market capital in the Malaysian stock market from nine main industries listed on Bursa Malaysia in year 2013. Using modified abnormal return model, earnings-return model, and price model as valuation models to investigate the relationship between disclosure, disclosure level, and disclosure quality of forward-looking information on firm’s stock return, this study hypothesized that all of the disclosure effects will positive and significantly affects stock return of the firm. The proposed moderating factors are hypothesized to significantly moderate the relationship between disclosure quality of forward looking information and firm’s stock return. Based on cross sectional regression analysis, findings show that the disclosure and disclosure quality of forward looking information is positive and significantly related with firm’s stock return under earnings-return model. Corporate governance practices and ownership structure also play a significant role in moderating the relationship between disclosure quality of forward looking information and firm’s stock return. Both factors have strengthening the relationship based on findings that show the positive and significant relationship between interaction variables with firm’s stock return under abnormal return model at week 4 and price model respectively. However, relationship between disclosure level of forward-looking information and firm’s stock return is not significantly related in any of the valuation models. The empirical findings suggest that disclosure quality of forward-looking information is significant to improve firm’s stock return instead of focusing on the disclosure level of forward-looking information. From the findings, accounting standard setters and regulatory bodies could improve and make some renewal on corporate disclosure guide by outlining specific criteria of information that can be considered as quality information in preparing forward-looking statement and to promote corporate transparency. In addition, this result can contribute in assisting the family owned firms on how to entice back the attention of investors upon their perception towards information asymmetry issue caused by the agency problems that commonly exist in this type of ownership structure. At the same time, good corporate governance practices can be a better solution to attract investors’ attention towards the quality disclosure of forward-looking information to solve the information asymmetry issue and minimize the agency problems

Assessing the domestic and foreign Islamic banks efficiency: Insights from selected Southeast Asian countries

The objective of this study is to examine the technical efficiency (TE) and the decomposition of pure technical efficiency (PTE) and scale efficiency (SE) of domestic and foreign Islamic banks from the selected Southeast Asian Countries. The sample comprised of 29 domestic and foreign Islamic banks from Malaysia, Indonesia and Brunei over the period of 2006–2014. This study employ the Data Envelopment Analysis (DEA) method to measure banks’ efficiency. In addition, the parametric (t-test) and non-parametric (Mann-Whitney [Wilcoxon] and Kruskall-Wallis) tests also performed to examine the difference in the efficiency of the foreign and domestic Islamic banks. The results indicate that the domestic Islamic banks have exhibited higher efficiency levels compared to their foreign bank peers. In addition, the empirical findings from this study seem to suggest that the domestic Islamic banks have exhibited a higher efficiency levels for all three efficiency measures and consistent with home field advantage theory. The findings of this study are expected to contribute significantly to the regulators or policymakers, Islamic banking itself, investors and existing knowledge on the operating performance of the Islamic banking sector