The long-term effect of economic value added adoption on the firm’s business decision

© 2019, Emerald Publishing Limited. Purpose: This study aims to examine the long-term effects of adopting economic value added (EVA) as a compensation tool on managers’ behaviour. Design/methodology/approach: The authors extend the sample used in prior studies both in the time and the cross-section dimensions. Findings: The study conclusions are distinct from those offered by existing studies. The authors show that EVA adopters, relative to non-EVA adopters, increase the working capital cycle, use their assets less intensively and decrease their payouts to shareholders via a decrease in dividends and share repurchases. In investing decisions, the authors find a decrease in new investments, but no change in asset dispositions after the adoption of EVA compensation plans. Originality/value: The study results highlight that the EVA adoption provides more incentives to reduce the total cost for capital rather than increasing operations and maximising shareholder wealth. The results also have implication for corporate management, particularly in the area of management compensation scheme design

Drivers of mandatory disclosure in GCC region firms

Purpose: This paper aims to investigate firm-level variations in the extent of mandatory disclosures and address the drivers of mandatory disclosure using data from the Gulf Co-operation Council (GCC) region. Design/methodology/approach: The extent of mandatory disclosure is examined using a disclosure index created with reference to 24 International Financial Reporting Standards (IFRSs). Findings: The authors find that the extent of mandatory disclosure required by applicable IFRSs/International Accounting Standards increases with international presence, group firms, the level of voluntary disclosure, firm age and the education level of company financial controllers. It decreases with firm size and the proportion of institutional share ownership. The degree of board independence is positively related to the level of mandatory disclosure in firms with no state ownership. Profitability positively affects the level of mandatory disclosure to a greater extent in more liquid GCC firms. The results confirm that there is a greater sensitivity of mandatory disclosure to loss than to profit. Loss increases, whilst profit decreases, the extent of mandatory disclosure. Research limitations/implications: The results promote further understanding of international financial reporting differences in an emerging country setting. Practical implications: The findings provide a detailed insight to investors, financial analysts, practitioners and academics. Originality/value: The authors develop a highly granular mandatory disclosure index in a developing country setting and identify key drivers of such disclosure

Dividends, investment and pension contributions

We study the determinants of pension contributions for UK listed companies to better understand how the contributions decision is placed within the wider operational and strategic framework of the company. We model the potential displacement effect of discretionary pension deficit contributions in relation to corporate investment and dividends and find a significant displacement effect in relation to both which is further strengthened for dividends during periods of poor firm performance and financial constraints. Our results imply that the firms dividend payout and investment policies significantly influence its propensity to make extra pension contributions

Anti-money laundering law of Turkey and the EU : an example of convergence?

© 2011, Emerald Group Publishing Limited. PurposeThis paper critiques the recent anti-money laundering (AML) legislation in Turkey and the European Union (EU) in order to determine whether there is convergence between them. Given the fact that Turkey is a candidate country for the EU membership, harmonisation of Turkish and the EU AML frameworks has become increasingly important. These AML laws pose important responsibilities for the financial and legal sectors. Design/methodology/approachIn order to facilitate the evaluation process, the AML regimes examined are compared in regards to various aspects, such as criminalisation of money laundering, recording and reporting obligations, enforcement and sanctions mechanisms. Findings from activity reports from the regulatory bodies as well as semi-structured interviews conducted with relevant professionals are incorporated into the discussion. FindingsIt can be argued that the Turkish AML regime is in line with the EU AML framework. However, there is a need for government authorities to coordinate their efforts with the relevant independent regulatory professional bodies that represent the liable professionals in Turkey. While it is evident that each national regime in the EU has adopted a unique AML framework, minimum standards provided by international (e.g. the Financial Action Task Force) and regional (e.g. EU) instruments have been the main driving force behind all national laws. Practical implicationsThe involvement of professional regulatory bodies will enhance competence to monitor compliance and provide training mechanisms and guidance for liable professionals pertaining to AML regulations. Social implicationsEffectiveness of AML initiatives will enhance with improved cooperation and communication between the executive, law enforcement agencies and businesses. This will improve the reporting of suspicious financial activities and subsequent enforcement. Originality/valueThe paper provides an up-to-date account of the Turkish legal regime pertaining to AML and demonstrates its shortcomings whilst assessing it against the EU AML framework. The findings of the study contribute to the existing literature and shed light on areas for reform