Dividends, ownership structure and board governance on firm value: empirical evidence from Malaysian listed firms / Zunaidah Sulong, Fauzias Mat Nor

This paper aims to examine the effects of dividends, types of ownership structure and board governance on Malaysian firm’s value using sample of 406 listed firms on the Main Board of Bursa Malaysia. A cross-sectional analysis for the years 2002 and 2005 was utilised. Both direct effects as well as the moderating effects of board governance with dividends and types of ownership structure are examined. The moderating relationship is considered in order to investigate the board governance role after the implementation of the Malaysian Code of Corporate Governance through the amendments of Bursa Malaysia Listing Requirements in 2001. Result from the direct effect reveals that dividend has a significant positive effect to firm value in both years, thus supporting the expected hypothesis. This finding is consistent with the view that dividends mitigate agency costs of free cash flow problem, therefore, increase firm value. The finding also suggests that dividends among Malaysian listed firms can play its important monitoring role in reducing agency costs. However, contrary to expectation, government ownership indicates significantly positive relationship. Correspondingly, the result implies that investors in the Malaysian market do value the higher standards of corporate governance reform found in the government-controlled firms. In addition, foreign ownership has a negative significant relationship to firm value which is also contrary to what is expected. Surprisingly, results on ownership concentration and managerial ownership provide insignificant effect to firm value for both years. Of particular interests are the results of moderating effects, the result reveals that board duality has significantly moderated the relationship between dividends and firm value with a lower coefficient positive effect as expected. Thus, support the expected hypothesis. As expected, the result from the moderating effect of board duality with government ownership in year 2002 provided negatively significant result. However, both results of board duality with dividends and government ownership provide insignificant effect for the year 2005. Further, the interaction term between dividends with board independence was positively significant for the year 2005. Whereas, the interaction term between dividends and board size showed significantly lower coefficient positive moderating effect for both years. Finally, the inclusion of board size interaction term to foreign ownership provided significantly negative moderating effect in year 2002. Overall, findings from this paper reveal that good board governance; particularly board independence and board size can enhance the monitoring role of dividends, government, and foreign ownership in reducing agency costs, thus increasing firm value

Respons Of Islamic Stock Markets To Monetary Policy Empirical Evidence from Indonesia

AbstractPurpose - The impact of stock market and capital formation on economic growth in Indonesia for the period of January 2015 – May 2019. This paper examines a long-run equilibrium relation between stock market, capital formation and economic growth and other control variables.Method - This study uses autoregressive distributed lag (ARDL) model.Result - Findings revealed that none of the models was stationary at level but were all stationary at first difference. There is not a short run significant relationship between stock market, capital formation and economic growth in Indonesia. In the long run, capital formation has a significant positive association on economic growth and a negative non-significant relationship between stock market and economic growth in Indonesia.Implication - This research is useful to know the response of Sharia market to monetary policy instruments in Indonesia so that the Sharia stock market strategy is potentially developing in the future to encourage the achievement of characteristics such as An alternative source of financing and investment for economic actors and able to facilitate risk mitigation needs for market participants and able to drive the efficiency of transactions in the market through the improvement of the quality of stock market infrastructure Sharia.  Originality - The update of this research is response of Sharia stock market response to monetary policy instruments in Indonesia that are researched using ARDL models

Respons Of Islamic Stock Markets To Monetary Policy Empirical Evidence from Indonesia

AbstractPurpose - The impact of stock market and capital formation on economic growth in Indonesia for the period of January 2015 – May 2019. This paper examines a long-run equilibrium relation between stock market, capital formation and economic growth and other control variables.Method - This study uses autoregressive distributed lag (ARDL) model.Result - Findings revealed that none of the models was stationary at level but were all stationary at first difference. There is not a short run significant relationship between stock market, capital formation and economic growth in Indonesia. In the long run, capital formation has a significant positive association on economic growth and a negative non-significant relationship between stock market and economic growth in Indonesia.Implication - This research is useful to know the response of Sharia market to monetary policy instruments in Indonesia so that the Sharia stock market strategy is potentially developing in the future to encourage the achievement of characteristics such as An alternative source of financing and investment for economic actors and able to facilitate risk mitigation needs for market participants and able to drive the efficiency of transactions in the market through the improvement of the quality of stock market infrastructure Sharia.  Originality - The update of this research is response of Sharia stock market response to monetary policy instruments in Indonesia that are researched using ARDL models

A Note On The Effect Of M&A Announcements On Stock Price Behavior And Financial Performance Changes: The Case Of Arab Malaysian Bank Berhad And Hong Leong Bank Berhad

This study examines the effect of M&A completion announcements on the stock price behavior for two anchor banks in Malaysia: Hong Leong Bank Berhad and Arab Malaysian Bank Berhad. The analysis uses the event study technique, the Naïve Model, a model that is based on Market Model with constrained ? = 0 and ? = 1 to compute the abnormal returns surrounding the M&A completion announcement date and to evaluate the effect of M&A completion announcement on the banks’ return. The results from event study show that the M&A completion announcements are treated as positive information by the market

Financial Analysis Of Bank Al Bilad

This paper presents a model for the financial analysis of a bank based on the DuPont system of financial analysis. The DuPont system of financial analysis is derived from an analysis of return on equity that consists of three parts:  1) operating efficiency as measured by profit margin, 2) asset use efficiency as measured by total asset turnover, and 3) financial leverage as measured by the equity multiplier.  The analysis covers the period from mid 2005 to 2009. The DuPont system of analysis assesses the performance of the Arabian institution since its establishment in the Spring of 2005

Effectiveness of Foreign Exchange Market Intervention in Nigeria (1970-2013)

The instability in the value of naira have made the Central Bank of Nigeria (CBN) a regular actor in the foreign exchange market in its efforts to stabilise the value of Naira and counter the disorderly behaviour of the market. This paper examines the effectiveness of the CBN's intervention operations in the foreign exchange market using annual secondary time series data of four variables. The variables are the exchange rate, money supply, net foreign asset (a proxy for intervention variable), and lending rate ranging from 1970 to 2013. The result from the Johansen Juselius cointegration test shows that the naira exchange rate, intervention variable and monetary aggregates are cointegrated. The result from the ECM also indicates that the naira exchange rate will adjust and re-establish itself at the speed of 12% annually. Moreover, the result of the Granger causality test the CBN intervention is non-sterilised. Therefore, the CBN should provide an effective way through which its foreign exchange market intervention could be efficient and sterilised so as to ensure stability in the exchange rate and the price level. Keywords: Foreign Exchange Market, Nigeria, Exchange Rate JEL Classifications: E50; E52; E58; F3

An analysis on ethical climate and ethical judgment among public sector employees in Malaysia

Many unethical business practices have alerted the deterioration of ethicalness among employees of public sector. As such, the public is skeptical towards the ethical issues in public sector and accuses them of forming unethical judgments. Specifically, this study aims to analyse the influence of ethical judgments on the intention towards unethical behavioural practices among employees in selected Malaysian public sectors. The data is analysed using a simple regression analysis based on 151 responses of a questionnaire survey. However, the overall finding of this study has shown a positive significant relationship between ethical climate and ethical judgment of employees’ behaviour on selected financial decisions in Malaysian public sectors. Hence, it will be useful to those in public sector in their effort to improve ethical awareness and ethical judgments. Recommendations are highlighted on how to improve the credibility and viability of public service delivery system towards national prosperity

International Financial Reporting Standards Convergence and Quality of Accounting Information: Evidence from Indonesia

The International Financial Reporting Standards (IFRS) initiated by International Accounting Standard Board (IASB) are principle-based standard that require extensive disclosure of financial statements and accounting information as compared to prior standard that is the Generally Accepted Accounting Principles (GAAP) to better reflect the overall quality of company's performance. Therefore, the IFRS convergence is expected to improve the reliability of financial reporting by limiting opportunistic managerial discretion. The conjecture is the mandatory adoption of IFRS will reduce the managerial discretionary behaviors to engage in earnings management practices, thus improving earnings quality and value relevance of accounting quality information.  High quality of accounting information in terms of earnings quality and value relevance can stimulate investors' behavior in the stock market exchange. This study utilises a sample of 110 manufacturing sector companies for the years 2009 to 2014, to include pre-IFRS (2009 to 2011) and post-IFRS period (2012 to 2014). The data is analyzed using multiple regression technique by using the pooled least square method. The results of earnings management model of the study indicate that there are significantly positive relationship between size and leverage on earnings management. Whereas, the level of gross fixed assets is found to have a significant negative effect on earnings management. While, value relevance model the result shows there are significantly positive relationship between earnings per share (EPS), book value per share (BVPS) and size. Whereas, the leverage is shows significantly negative effect to earnings management. Overall, this study provides evidence of effect of IFRS convergence on the quality of accounting information is increase in term of value relevance but decrease in term of earning management. Keywords: IFRS Adoption, Earning Quality, Earning per Share, Book Value per Share JEL Classifications: M41, G1

The Interpretation Of In Context Verbal Probability Expressions Used In International Accounting Standards: A Comparison Of English And Chinese Students Studying At English Speaking Universities

This study examines the differences in the interpretation of ten in context verbal probability expressions used in accounting standards between native Chinese speaking and native English speaking accounting students in United Kingdom universities. The study assesses the degree of grouping factors consensus on the numerical interpretation of the probability expressions. Unlike previous studies, this study uses subjects who share a common language (English), respond to a survey written in the common language, and are being educated in that common language. The results show that native culture and language are not significant factors in explaining differences between accounting students in their interpretation of in context verbal probability expressions. Future research comparing Chinese students in China with Chinese students at English speaking universities would be useful in evaluating the extent that common language and cultural differences has on the results

The Influence of Earnings Volatility on the Association among Leverage and Real Earnings Management

The association between leverage (LEV) and Real Earnings Management (REM), as well as how the volatility of earnings affects this relationship, are examined in this paper. The study sample comprises all non-financial companies listed on the Pakistan Stock Exchange from 2004 to 2018. Due to the endogeneity issue between the variables and the two-step system Generalized Method of Moment (SYS-GMM) dynamic panel estimator, business risk will be used as an interaction term in the hypothetical model to examine the association between LEV and REM. The model will be further elaborated using agency theory and positive accounting theory. After examining the connection between LEV and REM, the study will examine how business risk affects earnings volatility for the Pakistan Stock Exchange