International Journal of Economics, Management and Accounting
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Market Mechanism in Islam: A Historiacal Perspective
No full textMarket Mechanism in Islam: A Historiacal Perspectiv
TESTING A MODEL OF ISLAMIC CORPORATE FINANCIAL REPORTS: SOME EXPERIMENTAL EVIDENCE
Get PDFGiven the fact that religion stands at the core of some cultures, and that Islam is a significant force influencing the manner in which Muslims conduct their public and private lives, the influence of Islam on accounting may be significant. In line with this, Baydoun and Willett (1994 and 2000) suggested that the current value balance sheet and the value added statement would meet Islam's objectives of socio-economic justice and accountability, thus satisfying the needs of Muslim users to a greater extent than would the traditional historical cost balance sheet and the profit and loss statement. Baydoun and Willett's model of Islamic corporate financial reports was initially tested through a questionnaire survey by Sulaiman (1998) which, surprisingly, found no differences in the perceptions of usefulness between Muslim and non-Muslim respondents. Before dismissing such an important conceptual model for lack of empirical support, an alternative empirical test should be conducted in which greater control for internal validity of data is achieved. To this end, the researcher examined the same issue using a laboratory experiment. The results of the experiment proved to be consistent with Sulaiman (1998). No significant differences in the perception of usefulness of the current value balance sheet and the value-added statement between Muslim and non-Muslim subjects were evident.JEL classification: M41, Z12Key words: Islam, Current value balance sheet, Value-added statement
IWAD AS A REQUIREMENT OF LAWFUL SALE: A CRITICAL ANALYSIS
No full textThis paper will argue that replacing riba with al-bayc does not mean that the latter can imply any form of sale (al-bayc) to justify Islamic legitimacy. Apart from the prohibition of uncertainties (gharar) in sale, the requirement of an equivalent countervalue (ciwad) must also be met. Risk (ghurm) and liability (daman) after sale and value-addition or effort (ikhtiyar) are the principal components of ciwad. As such, any increase from sale must contain ciwad, otherwise riba is implicated. In classical Islamic commercial contracts such as ijarah, salam and mudarabah, ciwad is evident. However, the contracts of credit of al-murabahah or al-bayc bithaman ajil are widely used by Islamic banking practitioners. To prove Islamic legitimacy, this contract must show that the financiers assume the risk of ownership in making the sale. It must also show evidence that the seller is liable to the option of defect (khiyar al-cayb). The same holds for bayc al-cinah and bayc al-dayn which are also widely used in Islamic money and capital markets in some Muslim countries.JEL classification: G20, K39, Z12Key words: Islamic banking, Iwad, Rib
MODIFIED NOMINAL GROUP TECHNIQUE FOR GROUP DECISION-MAKING
Get PDFNominal Group Technique is a useful tool to solve group decision-making problems. The technique generates and subsequently prioritizes a large number of ideas in a group setting. It has the following steps: (i) statement of the question pertaining to the issue; (ii) silent generation of ideas in writing; (iii) round-robin recording of ideas; (iv) serial discussion on the ideas; (v) voting to select the most important ideas; and (vi) discussion on the selected ideas. In the fifth step, the participants need to find out and subsequently rank the five most important ideas. In the existing framework of the methodology, there is no guidance to select the best five ideas, rather they (the participants) have to do it by a holistic approach. By means of two experiments, this research proposes and substantiates the use of the Analytic Hierarchy Process to guide the participants to choose and rank the best five ideas. This is expected to give more rigor to the technique and continue to remain effective in solving group decision-making problems in diverse areas. The paper has further explored the issues related to Muslims that can be resolved through the proposed modified technique.JEL classification: C61Key words: Nominal group technique, Analytic hierarchy process, Group decision-makin
ACCRUAL MANAGEMENT AND THE INDEPENDENCE OF THE BOARDS OF DIRECTORS AND AUDIT COMMITTEES
Get PDFThe recent revelation of the misleading audited accounts of several big companies in the US has heightened public concern about the integrity of a firm’s financial reporting processes. The management of the accounts is commonly known as accrual management as it is effectively accomplished through manipulation of discretionary accruals. A firm’s internal corporate governance systems should be able to constrain the extent of earnings being managed. To this end, this paper investigates one important aspect of the internal corporate governance, namely the independence of the board of directors and the audit committee. It is argued that the extent to which the board and the audit committee are independent of management determines their ability to constrain the management of discretionary accruals. Using data from the Kuala Lumpur Stock Exchange (KLSE) non-financial Main Board listed companies in 1998 evidence showed that neither board independence nor the audit committee independence effectively constrained the accrual management level. The interactive effects of board independence and audit committee independence were also found to be insignificant. Evidence in this paper, therefore, casts doubt that the independence of boards and the audit committee can lead to high quality accounting information, which is thereby useful to users.JEL classification: G34, M41Key words: Accrual management, Audit committee independence, Discretionary accrual
Rationality in Economic Theory: A Critical Appraisal
No full textRationality in Economic Theory: A Critical Appraisa
Financing Socioeconomic Development with Zakat Funds
No full textFinancing Socioeconomic Development with Zakat Fund