March 2016 (Journal of Accounting, Finance and Economics)

March 2016 (Journal of Accounting, Finance and Economics)

Total Articles - 7

Pages 1 – 20

Author: Heba Ali

Using a comprehensive sample of 2853 UK rights issues launched from 1975-2007, this study introduces a new angle on testing the behavioural timing hypothesis in the context of SEOs via investigating the inter-relationships between the magnitude of firm mis-valuation and post-issue 3-year stock price performance. Firm mis-valuation is measured using (i) a methodology developed in Rhodes-Kropf, Robinson and Viswanathan (2005) of decomposing market-to-book ratios into mis-valuation and growth options components, and (ii) intensity of rights issuance activity (hot vs. cold markets). The findings exhibit compelling evidence in support of significant over-valuation of rights-issuing firms relative to non-issuing firms. The findings show an evidence in support of the behavioural timing hypothesis, robust to the used measurement method and benchmark return, which stands in line with the findings of Loughran and Ritter (1995), Brown, Gallery and Goei. (2006), Chen and Cheng (2008), and Hertzel and Li (2010).

Pages 21 – 29

Author: Ah-Hin Pooi and You-Beng Koh

The future value of the binary recession variable is modeled to be dependent on the present and past values of a set of m US economic variables selected from a pool of 14 variables via a conditional distribution which is derived from an -dimensional power-normal distribution. The mean together with the 2.5% and 97.5% points of the conditional distribution are used to predict the start of the next US recession. When and , some of the models can provide fairly good indicators for the start of the next US recession.

Pages 30 – 48

Author: Vandana Rao Daka and Sankarshan Basu

In this paper, the relation between hedging and leverage is studied using Indian firm data in the period 2002-2013 as the growth of Indian derivative markets has been rapid during this period following the economic liberalization. The analysis is carried out using a two-stage instrumental variable regression framework. The results show that hedging with derivatives allows firms to increase their debt ratio which results in a higher level of leverage leading to higher firm value from tax shields and are consistent with prior literature.

Pages 49 – 64

Author: Helal Uddin and Munim Kumar Barai

The contribution of microfinance to boost economy through poverty alleviation and employment generation is now arguably established all over the world. But based on the societal context of many countries, a new form of microfinance instrument called Islamic microcredit has emerged in the market. This research tries to explore the role of Islamic microcredit in Bangladesh in increasing the borrowers’ income. For that, a total of 87 Islamic microcredit borrowers under the Rural Development Scheme of Islamic Bank Ltd. were interviewed with a structured questionnaire in the third quarter of 2015 to collect data. Expectedly, the research finds that Islamic microfinance helps the poor people get out of poverty through the rise of their income.

Pages 65 - 87

Author: Ming-Chang Cheng, Chien-Chi Lee, Quynh Nhu Tran Pham and Hui-Yu Chen

This study examines whether government policies have an impact on non-performing loans (NPL )ratio of domestic banks during dissimilar financial periods from 1994 to 2008.Theinfluence variables in the NPL ratio include the followings: loan to deposit ratio (DL), debt ratio(DB),bank size (ASSETS), earnings per share (EPS), capital adequacy ratio (Basel ratio; BIS) and directors and supervisors shareholding ratio (HOLD). To comprehend the relation between a bank’s ownership structure and its NPL ratio, we categorize banks according to their ownership structure: public banks, privatized banks, financial holding banks and private banks. During the 15 year period, the following conclusions can be made: Every bank can expand assets and reduce debt ratio to effectively reduce the probability of NPL ratio occurrence. During the first financial reform implementation, banks not only restrict loans to increase lending quality but also use their own capital or retained earnings to write off loans to reduce NPL ratio. Regarding HOLD, we find that when the government promotes policies to lower NPL ratio, directors and supervisors perform their supervision responsibilities more diligently.

Pages 88 – 100

Author: Basman Jalal Mazahrih, Daas Ibrahim Katrib and Tamer Mazyad Rfaah

This paper investigates the quality of environmental reporting information by chemical industry in Jordan. The focus is on prescribed accounting principles and reporting practices. Content analysis is utilized to examine and critique evidence. The study demonstrates the extent of environmental reporting in two companies’ annual reports at both national and international levels. The environmental reporting performance is measured against the literature and international initiatives. Results show differences between the two levels with regard to the quality, content and profile disclosure. The main reason for such variation in reporting could be attributed to the voluntary nature of environmental disclosure. In the absence of legislation regarding environmental disclosure, doubts remain about the likelihood of better quality reporting.

Pages 101 – 110

Author: Ibrahim Sulaiman, Noman Arshed and Muhammad Shahid Hassan

This study is designed to evaluate the impact of stock market development on general price level in five SAARC countries. The estimated results of Panel OLS, Fixed Effect model and Random Effect model has revealed that OLS model is not applicable thus, we have to use panel cointegration to find out the unbiased and normally distributed coefficient estimates to find out how the stock market development influences inflation. The results of long run estimates Fully Modified OLS suggests that in the long run, market capitalization is decreasing inflation, total value of stock traded is increasing inflation and turnover ratio is decreasing inflation in the long run. Thus, the results of our two proxies suggest that stock market development can help put chains on inflation in SAARC countries by introducing more firms to increase size and volume of share transaction, as they will load to rise in production.

Total Articles- 7

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