Seasonal return and firm size effect in the Malaysian Stock Market

This study examine the existence of seasonal return and firm-size effect in the Malaysian stock market. The results reveal that there are evidence of the January effect, the Chinese New Year effect, and the reverse August effect. Since there is no capital gain tax in Malaysia, the tax loss selling hypothesis cannot explain the January effect. Instead, the anomaly may be best explained by the market integration hypothesis in view that the January effect is also a worldwide phenomenon. The higher return observed in February indicates the presence of the Chinese New Year effect, which is attributed to the dominant role of the ethnic Chinese investors in the Malaysian stock market. Both effects are more robust in smaller companies as compared to larger firms indicating the existence of the firm size effect. The reverse August effect is reflected by the negative return in August which is due to the significantly lower trading activities during the month

ANALYSING THE CHARACTERISTICS AND PERFORMANCE OF ISLAMIC FUNDS: A CRITICAL REVIEW OF THE MALAYSIAN CASE

This study provides a critical review of the characteristics and performance of Islamic funds in Malaysia with the main objectives of identifying the return and risk profile of Islamic funds and examining the Islamic funds’ performance and valuation methods. The study was conceived on the back of the impressive growth of the Islamic fund industry amid abundant evidence and a common perception that Islamic funds generally underperform conventional funds. The study is designed to address four main areas, namely to analyse the return and risk characteristics of Islamic funds; to examine the performance trend of Islamic funds; to investigate the impact of Shariah-compliance requirements on Islamic funds’ performance; and, to explore the actual Islamic fund operation by fund management companies through the perception of those involved in the actual practice. To ensure that the study is undertaken thoroughly, the study employed the methodological triangulation technique, of which, the findings are deduced from three methods of analysis namely literature review, quantitative analysis, and qualitative analysis based on primary data collected through interviews. The findings of the study are deemed both intriguing and thought provoking. The study found that the existing Islamic funds have been created largely by mimicking conventional funds whilst economic motive, rather than religious motive, is arguably the main reason behind the creation of Islamic funds. Islamic funds are distinguished from conventional funds based on their Shariah identities, particularly with regards to stock selection and Shariah-compliance supervision. In general, relative to conventional funds, Islamic funds are characterised by a lower return but with higher volatility, have limited numbers of profitable stocks or industries whose returns are strongly and positively correlated, have a smaller fund size and low fund subscription rate, and are mainly invested in heavyweight stocks involved in defensive industries. Interestingly, although the Shariah-screening may expose Islamic funds’ portfolio to have high investment concentration in small-capitalised stocks, the study found that Islamic funds which invest mainly in large-capitalised stocks could outperform conventional funds and the market index. The analysis of Islamic fund performance is also sensitive to the benchmark used for performance comparison. The study also found that Shariah requirements affect Islamic funds’ performance adversely by incurring additional Shariah-related costs and introducing new Shariah non-compliance risks which are peculiar only to Islamic funds. In addition, the study revealed that there is a huge gap in terms of Shariah understanding and adoption of Shariah principles in the creation of Islamic funds. It is noted that despite the finding of Islamic funds’ underperformance, it can be argued that the evidence does not in any way represent a disadvantage of Islamic funds, considering that the underlying philosophy of the funds is not merely to maximise monetary return, but rather, to attain other non-pecuniary motives including adherence to religious principles and achievement of the objectives of the Shariah (maqasid al-shariah). With regards to Islamic fund performance valuation, the study found that the popular methods used by Islamic fund managers are the peer group comparison and the tracking error techniques instead of the traditional risk-adjusted return valuation models. The study also found that active fund management is probably the best strategy for Islamic funds in Malaysia as compared to the simple buy-and-hold or passive fund management strategy

Examining the commitment of the managers of small and medium-sized enterprises in China towards corporate strategic management

In the current era, the trend of world economic integration has gradually strengthened, and international competition has become increasingly fierce. As an important factor in the development of enterprises, strategic management of enterprises is also valued and has a profound impact on the growth and development of enterprises. Therefore, it is of more important theoretical and practical significance to study the manager’s degree of emphasis on small and medium-sized enterprises to the strategic management of enterprises. Based on this, this study analyzes and explores the degree of commitment of small and medium-sized enterprises’ managers to corporate strategic management, focusing on the four influencing factors of corporate strategic management (business model, internal environment, external environment, and market competition) to conduct investigations and studies, and then analyze the manager’s degree of emphasis of small and medium-sized enterprises to the corporate strategic management. The main purpose of this study is to explore the managers’ degree of commitment toward strategic management. Through research and discussion, small and medium-sized enterprise managers will investigate and study the attitudes and behaviors of the four influencing factors of corporate strategic management to achieve the goal. This study uses quantitative research to test the hypotheses and collects data on behalf of independent variables and dependent variables through questionnaires. And this study used two commonly used software tools, SPSS and Smart PLS

Examining the factors that influence the intention to register for hajj among depositors in Tabung Haji Sabah

Registration for Hajj in Malaysia through Tabung Haji (TH) is a significant and religiously important process for Malaysian Muslims who wish to perform the Hajj pilgrimage to Saudi Arabia. Hajj pilgrimage is one of fundamental pillars of the Five Pillars of Islam and a compulsory religious duty for Muslims who are physically and financially able to undertake the journey at least once in their lifetime. TH is a government-owned institution that specializes in facilitating the Hajj for Malaysian Muslims by providing comprehensive Hajj packages, support and guidance. Unfortunately, however, there are a significant number of TH depositors who are unaware of the need to register for Hajj as evident from the number of depositors who have not registered for Hajj against the number of depositors who are already eligible for Hajj registration. Thus, the aim of this study is to reveal the determinant that influence TH depositors in their intention to register for Hajj in Sabah. The study also notes the relationship between perceived behavioral control, ibadah personality and service quality with the intention to register for Hajj. The study applied a quantitative analysis by distributing survey questionnaires among TH depositors in the state. The findings indicated that all three factors, namely perceived behavioural control, ibadah personality and quality of the service, are the influencing reasons on the intention of TH depositors to register for Hajj in Sabah. This study is significant as it is one of the earlier studies in Malaysia, particularly in Sabah, that examine the intention to register for Hajj from the perspectives of TH depositors. Therefore, the findings will have the practical use particularly for TH to enhance their strategies in attracting TH depositors to register for Hajj

The role of financial literacy and individual's behavioural belief in predicting retirement savings in Malaysia

This paper investigates on how different level of financial literacy interacts with retirement savings in Malaysia. Alongside, the study adds mediating variable of individual behavioural beliefs, which focuses on public and private employees’ intention to accumulate regular savings for an old-age provision. The significant factors have found between advanced financial literacy and retirement savings, with the mediating effect of behavioural beliefs for that association. However, basic literacy has no sufficient impact, so does the mediating effect to support the outcome variable. Several implications have emerged: government and stakeholder’s involvements in intensifying financial educational programmes exclusively for advanced capital markets and strategic investment, offering more alternative retirement savings and investments portfolio with a higher potential growth of product, and by constantly promoting individual’s salient beliefs notably for those with an advanced literacy and propensity to save and invest for retirement adequacy

Capital structure decisions: evidence from large capitalised companies in Malaysia

This study aimed to determine the factors influencing the capital structure decisions in Malaysia using the companies listed on the FTSE Bursa Malaysia Top 100 Index. The objectives of this study were achieved by examining the relationship between leverage (dependent variable) and four determinants identified as independent variables, which included profitability, tangibility, liquidity and firm size. Data of 69 firms which covered the period from 2007 to 2011 were evaluated using the panel data analysis with total observations of 345 firm-years. By applying the fixed effects regression model, results showed that profitability, tangibility and liquidity had significant negative relationship with leverage while firm size is positively related with leverage. Moreover, results also revealed that profitability was the most influential factor of the capital structure in Malaysia. The findings of this study were consistent with several previous studies as well as the theoretical background of capital structure determinants. These results also may represent the unique characteristics of capital structure of firms in Malaysia

A serial mediation model of financial knowledge on the intention to invest: The central role of risk perception and attitude

Addressing the complexity of financial decision-making process, this study assessed the effects of financial knowledge towards the financial behavioural intention to invest with both risk perception and attitude, in serial, as mediators among young Malaysians. This study operationalized financial knowledge as actual financial knowledge (objective knowledge) and self-rated financial knowledge (subjective knowledge). Using purposive sampling strategy, this study sampled 492 respondents who were of below the prime-savings years for the questionnaire survey. The resultant outcomes of this study revealed significant mediating effects of risk perception and attitude in the sequential positive relationship between financial knowledge and financial behavioural intention to invest. Apart from the significance of financial knowledge in the financial decision-making process, this study also unravelled the complexity of the relationship of knowledge and behaviour with the combination of risk perception and attitude

An Investigation of Financial Investment Intention using Covariance-Based Structural Equation Modelling

Purpose: Decision-making process about financial investment is complicated. Relying on modern financial theory to explain behaviours of individual investors is inadequate because it focuses on the objective risk as the determinant for making investment decisions under the assumption that individuals are rational. The current study, which was built from the financial, sociological and psychological perspectives, investigated the predictors of risk perception and determined the association of risk perception and attitude toward financial investment intention. This study served the purpose of unravelling the complexity of the financial investment decision-making process among individuals. Design/methodology/approach: The research framework was based on Perception Formation Model (PFM) with further support from the Theory of Planned Behaviour, decision making models under risk, and knowledge-attitudebehaviour model. Purposive-sampling method was adopted. The dataset, which consisted a total of 492 responses from income earners below the age of prime savings years were entered for analysis. Twelve hypotheses were tested using the Analysis of Moment Structures (AMOS) statistical software. Findings: Measurement-model assessment revealed the data fitted well to the research model Results from the structural-model assessment revealed subjective knowledge, peer influence, internet influence, and risk propensity had a significant relationship with favourable risk perception. Consistent with the PFM proposition, it was found favourable risk perception significantly related to higher intention toward financial investment. Research limitations/implications: The resultant outcomes strengthen the understanding of how financial investment decision is performed by individuals, which is crucial in the personal-finance industry, especially in promoting a long-term and meaningful client-advisor relationship. Interestingly, objective knowledge, which measured the actual level of financial knowledge was found to be insignificantly associated with risk perception and intention toward financial investment. As a sizeable financial literature posited financial knowledge has impact on decision-making process, future study could perhaps examine whether objective knowledge could contextually alter the relationship between predictors and the endogenous variable. Originality/value: The study has successfully identified several predictors for risk perception about financial investment and provided an empirical link for knowledge-perception-attitude-intention, thus, enriching the behavioural finance literature. The research model was robust as it was formulated based on the three major pillars of behavioral finance, namely: financial, sociological, and psychological perspectives