International Journal of Economics, Management and Accounting
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ACCOUNTING IRREGULARITIES AND TAX AGGRESSIVENESS
Full text linkWe examine the association between the incidence of accounting irregularities and aggressive tax reporting. We use Beneish’s M-score model to measure accounting irregularities and effective tax rates (ETR) to measure tax aggressiveness. Based on analysis of publicly listed Malaysian firms from 2008 to 2011, we find a positive but not significant relationship between accounting irregularities and tax aggressiveness. Though contrary to prior findings, our study adds to the evidence of the various motivations behind the unethical behavior involving financial reporting and/or taxation decisions. The finding of this study is useful to both financial and tax authorities in understanding the link between financial and tax reporting decisions
MODERATING EFFECTS OF BOARD EQUITY OWNERSHIP ON THE RELATIONSHIP BETWEEN ENTERPRISE RISK MANAGEMENT, REGULATORY COMPLIANCE AND FIRM PERFORMANCE: EVIDENCE FROM NIGERIA
Full text linkRisk management has become central to the financial sector development of any economy. The collapse of world leading financial institutions in 2008/2009 have raised questions about the role of risk management and compliance with regulatory provisions in shielding firms against failure. Also, the post adverse effects of the global economic meltdown have continued undermined the performance of financial institutions, Nigeria inclusive. The aim of this study is to examine the moderating effect of Board Equity Ownership on the relationship between ERM framework implementation, regulatory compliance and the non-financial performance of financial intuitions in Nigeria. The sample of the study consists of 163 financial institutions in Nigeria. We collected data from the chief risk officers and other top level managers of the organizations. The study utilized PLS-SEM path modelling with the help of SmartPLS 2.0 software to test the research framework. The findings revealed that ERM framework implementation and regulatory compliance have significant positive effects on the non-financial performance. Also, the study supported the third hypothesis that BEO strengthens the positive relationship between ERM framework adoption and the firm non-financial performance. In the case of compliance, the interaction effect (BEO*COP) did not influence the firm non-financial performance. The study recommended the need for regulatory agencies to encourage board equity ownership but with a caveat to prevent interest entrenchment that may lead to abuse
FACTORS INFLUENCING CO-MOVEMENT OF DIVERSIFIED PORTFOLIO BETWEEN PAKISTAN AND INDIA
Full text linkAn internationally diversified portfolio is effective if the co-movement pattern among underlying securities is analyzed not only on the basis of past returns but also on market and economic factors that can explain such co-movements. The current study determines the role of bilateral foreign portfolio equity holding, gross domestic product (GDP) and interest rate differential on international co-movement patterns among emerging and frontier Asian (EFA) markets. We started our analysis by estimating rolling beta estimation used in formulating bilateral co-movement index. After that, ARDL technique is applied to check long term relationship among the included variables. For short term relationship, error correction term is added for measuring speed of convergence toward long run equilibrium. Finally, we applied variance decomposition analysis under the VAR framework to check individual variances of each independent variable on bilateral equity return co-movement. We report significant long run relationship between bilateral equity co-movement and GDP growth differential of Pakistan and India. The presence of short run relationship among all variables with high speed of convergence suggests that the process reverts itself toward the long run. Our findings regarding significance of Gross Domestic Product (GDP) growth differential between India and Pakistan support the portfolio balance theory proposed by Kodres and Pritsker (2002)
CRITIQUE ON RISKS IN ISLAMIC HOME FINANCING
Full text linkThis article examines the housing and financing market in Malaysia and consequently investigates how risk impacts on the Rental Rate Index (RR-i), proposed as an alternative to interest rate in Islamic home financing by researchers in an earlier research. It looks at both inherent and market-wide categories of risks and variables used in deriving the rental rate in the pricing for Islamic home financing. Qualitative research methodology was used, adopting both descriptive and explanatory research design in analysing secondary data retrieved and also reviewing the literature on Islamic home financing. This approach analyses risks that affect determinants of the rental price, through causal or chain explanations between the variables used in the original RR-i research. The study found risks peculiar to the industry arising from Islamic financing contracts rendering potential rental price index a real challenge in maintaining solvency. Credit risk, market risk and operational risk forming part of the risk premium calculations in deriving the rental rate and economic indicators also have issues needing a more robust and resilient variables that will depict an exact measure of rental values. Specifically the research limitation include the longitudinal effects because the eight year analysis on house price and financing used in this investigation to measure change or stability over time is much constrained and may not be sufficient to witness real change occurring
DETERMINANTS OF MAQĀṢID AL-SHARĪ‘AH-BASED PERFORMANCE MEASUREMENT PRACTICES: THE CASE OF MALAYSIAN ISLAMIC BANKS
Full text linkThis study aims at investigating the practice of Maqāṣid al-Sharī‘ah based performance measures, determinants of its successful implementation and its impact on Islamic bank performance. Understanding the extent that Islamic banks are institutionalizing Maqāṣid al-Sharī‘ah based performance measures (Maqāṣid PMs) will provide greater insights into the development of Islamic banking in achieving the Islamic financial system objectives. A total of 146 questionnaires were distributed to all business units of all 16 Islamic commercial banks in Malaysia. The study found that contrary to the contemporary scepticism, Islamic banks in Malaysia are indeed promoting and committed to achieving Maqāṣid al-Sharī‘ah with the relevant performance measures in place. Specifically, the study found that performance measures for public interest and fairness are widely used by the Islamic banks. With communication technology and regulatory compliance, use of Maqāṣid al-Sharī‘ah based performance measures as Islamic banks’ performance driver becomes more potent
BETWEEN INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSS) AND FINANCIAL ACCOUNTING STANDARDS (FASS): THE DEBATE CONTINUES
Full text linkThis article continues the on-going debate on what would be the more relevant accounting standards for Islamic banks. It addresses this important issue by first examining the differences between IFRSs and FASs in light of their objectives, scope, and suitability for adoption by Islamic banks in reporting their sharī‘ah-compliant transactions. Specifically, the study approaches the issue from the ethics of reporting, that is on the possibility of misreporting leading to sharī‘ah non-compliance. Most importantly, in reviewing selected standards of IFRSs and FASs, the study finds that the over-emphasis on ‘comparability’ may potentially lead to misreporting. Thus, it views sharī‘ah a compliance from a broader perspective instead of only limiting it to the execution of underlying transactions. Finally, it calls for collaboration between the International Accounting Standards Board (IASB) and the Accounting and Auditing Organization of Islamic Financial Institutions (AAOIFI)
