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Asian Journal of Finance & Accounting
Number of Followers: 16

This is an Open Access Journal

Open Access journal
ISSN (Print) 1946-052X
Published by Macrothink Institute

[47 journals]

The Complementary Effects of Islam and CSR: Some Empirical Evidence
- Authors: Calvin W. H. Cheong, Nurul Ilma Salleh, Chorng Yuan Fung
  Pages: 1 - 28
  Abstract: This paper empirically investigates what has been claimed in the literature; that there are no significant differences between the Islamic and Western schools of business ethics. A proxy for the Western school is corporate social responsibility (CSR) while in the Islamic school, a reasonable approximation would be Shariah-compliance (SC). But because financial performance is not the main priority in CSR and SC, this study examines the effects CSR and SC has on firm resilience and firm risk. The regression estimates using an emerging market sample show that both CSR and SC improves firm resilience besides reducing firm risk in the following year. The findings empirically validate the claims made in the literature; that business ethics, Islamic or otherwise, are similar in substance and form. By empirically examining this claim, this study paves the way for a convergence of values and practices besides fostering greater unity between cultures.
  PubDate: 2019-01-07
  DOI: 10.5296/ajfa.v11i1.13976
  Issue No: Vol. 11, No. 1 (2019)
Motivations for Classification Shifting: A Systematic Review
- Authors: Nisreen Mohammed Almaleeh
  Pages: 29 - 40
  Abstract: The purpose of the current paper is to highlight the motivations that may encourage managements of firms to shift core expenses to special items in order to inflate core or operating earnings i.e. to practice classification shifting, which would have an effect on the decisions of financial statements' users. This was done through conducting a systematic review on the available literature about classification shifting. The most obvious findings to emerge from this study is that management may engage in classification shifting for the reason that it is less costly than other earnings management methods, the firm being in current or potential state of financial distress, the desire of the management of the firm to meet or beat earnings benchmarks, the ownership structure of the firm having some characteristics that encourage management to engage in such a practice, the firm performing in a weak corporate governance environment, or due to the fact that classification shifting is tough to be detected by external monitors compared to other earnings management methods.
  PubDate: 2019-02-18
  DOI: 10.5296/ajfa.v11i1.14242
  Issue No: Vol. 11, No. 1 (2019)
Volatility Estimation Using Symmetric and Asymmetric Models in Oil
Exporting Emerging Markets
- Authors: Latha Sreeram
  Pages: 41 - 63
  Abstract: The study empirically investigates the volatility pattern of thirteen emerging economies which are predominantly oil exporting countries. It is based on the time series data which consists of monthly closing price data of their index for a ten-year period from 01 January 2008 to 31 December 2017. Emerging markets are considered as investment destinations due to the presence of risk premium which has made the stock markets of these countries more volatile. Added to this is that these countries underwent crisis due to the sharp decline in crude oil prices as they were primarily dependent on oil exports. Hence it is a significant to study the volatility behavior of these countries. The study has been done by employing both symmetric and asymmetric models of generalized autoregressive conditional heteroscedastic. As per Akaike Information Criterion (AIC), Log likelihood and Schwarz Information Criterion (SIC) the study provides evidence that GARCH (1,1) and TGARCH(1,1) estimations are found to be the most appropriate model that fits symmetric and asymmetric volatility respectively for all the thirteen countries. There was evidence of volatility clustering and leptokurtic in all the countries considered in the study. While EGARCH model revealed no support of existence of leverage on the stock returns, TGARCH supported existence of leverage in case of four countries. The tests for asymmetries in volatility indicate the size effect of the news, reaffirmed through the results of sign bias tests and news impact curves, which indicate that the size effect is stronger for bad news than the good news for countries which supported existence of leverage.
  PubDate: 2019-02-24
  DOI: 10.5296/ajfa.v11i1.14202
  Issue No: Vol. 11, No. 1 (2019)
Perception of Government Accountants on Current Public Sector Accounting
Practices and Implementation of Public Sector Accounting Standards in the
Sri Lanka
- Authors: Vickneswaran Anojan
  Pages: 76 - 95
  Abstract: The main aim of the study is to find out the perception of government accountants on current public sector accounting practices and implementation of public sector accounting standards in the Sri Lanka. Public sector accounting practices involve with public expenditure, budget preparation, maintain proper accounting records, assets management, public financial management and provide reports on the public expenditure and revenue. Most of the public sector organizations do not prepare final accounts on accrual basis in the Sri Lanka. Primary data used in this study which data collected from government accountants in Sri Lanka. Mean analysis confirmed that there is moderate level of public sector accounting practices and implementation of public sector accounting standards in the Sri Lanka. Correlation analysis confirmed that there is significant relationship between public sector accounting practices and implementation of public sector accounting standards. Implementation of public sector accounting standards are positively impact on the public sector’s financial reporting practices and assets management practices in the Sri Lanka. Also below 23 percentage of public sector organizations are preparing final accounts on accrual basis. More than 97 percentage government accountants have ability to prepare annual accounts on accrual basis. Government administrators, policy makers and professional institutions should motivate effective and efficient implementation of the public sector accounting standards which will lead to a healthy public sector accounting practices in Sri Lanka.
  PubDate: 2019-03-25
  DOI: 10.5296/ajfa.v11i1.14469
  Issue No: Vol. 11, No. 1 (2019)
The Effect of Re-engineering of Administrative Processes in Achieving the
Competitive Advantage of Sustainable in Five-Star Hotels in Jordan - Field
Study
- Authors: Suleiman Mustafa EL-Dalahmeh
  Pages: 96 - 110
  Abstract: The main aim of the research was to identify the effect of Re-engineering of Administration Processes in Achieving the competitive Advantage of Sustainable in Five Star Hotels in Jordan. To achieve the objective of this study, a questionnaire distributed on 120 persons in Five Star Hotels in Jordan. 90 returned with a rate of 75%. The results of the study showed that there is a significant statistical effect at the level of significance of α ≤ 0.05 for the re - engineering of administrative processes in achieving sustainable competitive advantage in five - star hotels in Jordan in the following dimensions:* - Leadership * - Ability to analyze * - Advanced design * - Organizational communication * - Continuous improvementStrategic Planning. The total score of the mean of the study instrument was 4.43 and with a standard deviation of 0.35 and 88.6% at a very high degree.The results of the statistical analysis revealed the realization of the sample of the study in the investigated hotels, the extent of the effect of re-engineering the administrative processes in all its dimensions in achieving the competitive advantage.Based on the results of hypotheses tested, the six null hypotheses of the study were rejected. In the light of the findings, the researcher recommended that:1- The need to convince the management of hotels and hotel staff the importance of the application of re-engineering of administrative processes to achieve competitive advantage sustainable2- Utilizing the potential of graduates of new universities from the faculties of economics, administrative sciences and information technology.
  PubDate: 2019-03-26
  DOI: 10.5296/ajfa.v11i1.14353
  Issue No: Vol. 11, No. 1 (2019)
Bank Failure: A New Approach to Prediction and Supervision
- Authors: Calvin W. H. Cheong, Sockalingam Ramasamy
  Pages: 111 - 140
  Abstract: Bank failures are costly to customers and the wider market. Prevention is always better than cure but in light of recent economic downturns, it has become increasingly difficult for regulators to allocate more resources towards in-depth monitoring of banking practices. In this paper, we construct a tool that is able to predict bank failures ahead of time with reasonable accuracy. Through a logistic regression on a matched sample of 536 failed and non-failed US banks, we determine the financial indicators that most accurately predicts bank failure. From the regression, we construct a Bank Health Index that assesses a bank’s propensity to failure. In-sample and out-of-sample tests show that our model is about 90% accurate two years prior to failure, and 95% accurate the year before failure. The accuracy and efficiency of the model and index provides a more efficient and effective tool for assessing a bank’s propensity to failure besides requiring far less resources. With these methods, regulators will be able to take preventive measures at least one year before failure, saving the economy millions if not billions in the process.
  PubDate: 2019-04-08
  DOI: 10.5296/ajfa.v11i1.14455
  Issue No: Vol. 11, No. 1 (2019)
Application of Credit Risk Management Model in Chinese Banks
- Authors: Haojie Chen, Ng Sin Huei, Lew Shian Loong
  Pages: 141 - 168
  Abstract: The main objective of this paper is to perform empirical analysis and research on the KMV and Zeta models, discussing whether banks in China could adopt both models in their credit risk management practices. In order to measure credit risk, the KMV model focuses on “Expected Default Probability” (EDP) that is calculated using Black-Scholes Option Pricing Formula. On the other hand, the Zeta Model focuses on determining the probability of a company going bankrupt two years prior to the event. Previous research on risk management has shown that the primary risk the banks generally face is credit risk as an increasingly greater number of banks suffer losses because of credit issues. This paper therefore aims to add to the existing literature a strong case for the relevance of both the KMV and Zeta models to be considered in the topic of banks’ credit risk management.
  PubDate: 2019-04-10
  DOI: 10.5296/ajfa.v11i1.14168
  Issue No: Vol. 11, No. 1 (2019)
Emerging Technologies and the Accounting Profession: Trends and Topics for
Practitioners to Consider
- Authors: Sean Stein Smith
  Pages: 169 - 182
  Abstract: Emerging technology and technology tools such as blockchain, artificial intelligence, robotic process automation, and automation at large continue to drive change and disruption throughout the broader financial services landscape. While numerous articles, webcasts, and books have been put together analyzing these different topics and the implications they might have on different areas of the professional landscape, this article proposes a different approach. Instead of focusing on definitions, terminology, or assessing potential impacts at a higher level or through a broad scope of possible applications, this research examines certain specific trends and aspects of these technologies and the impacts they will generate on the profession. Definitions and work terminology will, of course, be a part of this research, but that does not form the core of this piece. Rather, and written with both a practitioner and academic audience in mind, certain emerging topics such and applications built on top of blockchain technology, as well as implementation issues connected to other emerging issues, are the core of this piece.
  PubDate: 2019-05-07
  DOI: 10.5296/ajfa.v11i1.14627
  Issue No: Vol. 11, No. 1 (2019)
Volatility Spillover Effect of International Crude Oil Futures and
China-Russia Stock Market: A Multivariate BEKK-GARCH Model Based on
Wavelet Multiresolution Analysis
- Authors: Maoguo Wu, Daimin Lu
  Pages: 183 - 201
  Abstract: The increasingly prominent strategic position of crude oil determines its high impact on macro-economy. The value of crude oil is reflected in the price of crude oil futures. Stock market is the barometer of macro economy. To what extent does international crude oil futures price affect stock market' China and Russia are the biggest importer and exporter of crude oil, respectively. Crude oil is of strategic value to both countries. This study empirically investigates the volatility spillover effect of international crude oil futures and China-Russia stock market from April 24th, 2015 to April 20th, 2018, based on the data of international crude oil futures prices, China-Russia stock market composite index, and industry stock index. The empirical results show that there is a short-term relationship between China-Russia stock market composite index and international crude oil futures price. The international crude oil futures price has a greater explanatory power to Russian RTS index, but a smaller explanatory power to Shanghai composite index. All industry stock indices are cointegrated with international crude oil futures prices. Except for China industry and Russia energy, the adjustment coefficient of international crude oil futures price on stock index volatility of other industries is insignificant. This study mainly studies the relationship between international crude oil futures price and the comprehensive stock index and industry stock index of China and Russia, and compares the impact of international crude oil futures price on the stock market of the largest importer and the largest exporter of crude oil to explore the linkage between crude oil futures price and stock market, and puts forward policy implications based on the empirical results.
  PubDate: 2019-05-19
  DOI: 10.5296/ajfa.v11i1.14348
  Issue No: Vol. 11, No. 1 (2019)
Empirical Evidence of the Causative Association between Spot, Futures and
Options Market: An ARDL Model Approach
- Authors: Vaishali Jain, Rahul Dhaigude, Rajiv Divekar
  Pages: 202 - 219
  Abstract: Purpose: The purpose of this paper is to explore and provide evidence about the nature of short run causal relationship as well as the speed with which prices adjust towards achieving the long run equilibrium between cash and FAO markets in India as represented by National Stock Exchange. The study uses individual stocks for studying the underlying relationship.Design/Methodology: The paper makes use of the auto regressive distributed lag model to study the causal relationship between spot, futures and options markets. The study makes use of the 15-minute interval trades data for the purpose of analysis.Findings: The ARDL model shows a long run association between spot, futures & options (both call & put) prices but we do not have sufficient statistical evidence to conclude the short run causal association between the variable except for call and put options.Practical Implications: The results indicate that derivative markets are not leading the spot market but spot market contributes towards price discovery in the FAO markets. Potential investors can take their positions and design their portfolio in the cash and FAO segments using the insights provided by this piece of work.Originality/Value: This paper is an original piece of work towards evidencing the causative association between spot, futures and options markets using individual securities. Matters pertaining to price discovery process in Indian financial markets are issues of interest for financial thinkers, traders, investors and financial analysts.
  PubDate: 2019-05-28
  DOI: 10.5296/ajfa.v11i1.14645
  Issue No: Vol. 11, No. 1 (2019)
How do Indian Firms Cope with a Crisis' - Earnings Management
Characteristics of CNX Nifty 100 Companies
- Authors: Amit Mittal, Ajay Kumar Garg
  Pages: 220 - 240
  Abstract: An analysis of Indian CNX Nifty 100 companies uncovers the perils of opportunistic earnings management as crises affect balance sheets in FY2007 and FY2012, recession years around the Global Financial crisis. Only a small portion of the companies engage in sophisticated earnings management commensurate with performance.Operating accruals of the firm are synonymous with its Working Capital investment. These accruals measure Working Capital dependencies in financing growth and should instantiate on PPE investments. The Modified Jones model is measured for the sample of CNX 100 companies including Banks and a DID approach used to compare data before and after a crisis year.Indian firms show only a 2% level of accruals, but more than 30% firm years show significantly higher accruals in growth years. The study proves indications of Performance measurement hypothesis yet primarily only Opportunistic accruals with negative correlation between Post crisis and pre-crisis accruals and accruals increasing in the post crisis year. Accruals are significantly incident on sales in the pre-crisis years.The presence of negative accruals may show effects of high growth and slack corporate governance. Banking firms respond with a more sophisticated earnings management strategy. Discretionary Loan Loss provisions significantly increase with increase in Cash profits. These Operating accruals of the firm are synonymous with its Working Capital investment.
  PubDate: 2019-05-30
  DOI: 10.5296/ajfa.v11i1.14839
  Issue No: Vol. 11, No. 1 (2019)
Assessment of the Adoption and Implementation of IFRS for Small and Medium
Scale Entities (SMEs). “A Study of Selected SMEs GA East of Ghana”
- Authors: John Kwaku Mensah Mawutor, Siaw Wlliams, Mensah Anita Oduwaa
  Pages: 241 - 258
  Abstract: The IFRS for SMEs is an important element for attaining competitive advantage, attracting investors and gaining access to financial assistance in today’s world of competitive business irrespective of their size. The study assessed the adoption and implementation challenges of IFRS for SMEs among SMES in GA East (Madina). To assess the adoption and implementation benefits and challenges, a qualitative research and conceptual and theoretical framework was developed. These guided the design of the data collection instrument to suit the research. The study collected primary data by conducting interviews on 20 respondents. Purposive sampling techniques were used to select the firms. Data collected as transcribed and coded into the Nvivo software. The study revealed that, about 60% of Small and medium entities in Madina do not have knowledge about the IFRS for SMEs. The study further revealed that meeting regulatory requirements and avoiding noncompliance cost were some of the factors that necessitated firms with little knowledge on the standard to adopt it.
  PubDate: 2019-06-04
  DOI: 10.5296/ajfa.v11i1.14678
  Issue No: Vol. 11, No. 1 (2019)
Investment and Growth Amidst Widening Government Debt: “The Ghanaian
Story”
- Authors: John Kwaku Mensah Mawutor, Eric Boachie Yiadom, Richard Fosu Amankwa
  Pages: 259 - 271
  Abstract: The study revisits the debt-growth nexus and broadens the argument to examine the unique effect of government debt on investment in Ghana. Data from World Development Indicators on the Ghanaian economy were sampled from 1990 to 2015. The empirical results from the Multiple Linear Regression (MLR) suggest an inverse relationship between government debt and economic growth in Ghana. In addition, a percentage increase in government debt reduces investment by 0.65%; implying that government debt harms investment due to fungibility of debt and accompanying debt repayment responsibilities. Policy ramifications resulting from the study are that the Ghanaian government should restructure public debt management to eliminate debt fungibility and reduce debt to GDP ratio as well.
  PubDate: 2019-06-04
  DOI: 10.5296/ajfa.v11i1.14679
  Issue No: Vol. 11, No. 1 (2019)
Determinants of Systemic Risk of Banks in India
- Authors: Mihir Dash
  Pages: 272 - 290
  Abstract: This study examines the determinants of systemic risk for banks in India. The independent variables considered for the study include the sector, bank size, return on assets, beta, leverage, capital adequacy, non-performing assets, price to book value, deposits, loans & advances, investments, net interest income, and non-interest income. A mixed panel regression model was applied, with bank fixed effects and year random effects.The results of the study indicate that public sector banks have a much higher level of systemic impact than private sector banks. Further, the determinants of systemic impact are different for public sector and private sector banks. The systemic impact of public sector banks was positively related with size and negatively related with price to book value ratio and investments to total assets ratio, while the systemic impact of private sector banks was negatively related with return on assets and positively related with beta and net interest income to total funds ratio.
  PubDate: 2019-06-04
  DOI: 10.5296/ajfa.v11i1.14157
  Issue No: Vol. 11, No. 1 (2019)
The Impact of Managerial Entrenchment Indicators on Cash Holding
Adjustments: Stock Exchange Firms
- Authors: Zahra Hashemi Oskouei, Zeynab Aminifard
  Pages: 291 - 306
  Abstract: This paper investigates the relationship between the managerial entrenchment and cash holding adjustments for a sample of 140 firms listed in the Tehran Stock Exchange (TSE) during 2011 to 2016. To measure the managerial entrenchment, four indicators of manager's duality, management reward, dividends, and over-investment risk were employed. A multiple linear regression model was used in order to test the hypotheses of the research. The results indicate that when management rewards were used to measure the managerial entrenchment, there is a significant positive relationship between the management rewards and cash holding adjustments. Also, there is a significant positive relationship between the over- investment risk and cash holding adjustments. Cash holding speed was found to have a significant positive effect on the relationship between dividend (managerial entrenchment) and cash holding adjustments. These results suggest a significant positive relationship between the managerial entrenchment and cash holding adjustments.
  PubDate: 2019-06-12
  DOI: 10.5296/ajfa.v11i1.14805
  Issue No: Vol. 11, No. 1 (2019)
Does Nifty Index Inclusion (still) Convey Information' A Comprehensive
Empirical Examination in the Indian Stock Market
- Authors: Srikanth Parthasarathy
  Pages: 306 - 329
  Abstract: The objective of this study is to conduct a comprehensive empirical examination of the S&P CNX Nifty index additions, for the complete period (2000 - 2018), first sub period (2000-2009) and second sub period (2010-2018), using both the price and non-price effects and the explanations surrounding them in the Indian stock market. This event methodology is used with three abnormal return computational methods, around the announcement and inclusion dates of index addition, in order to improve the robustness and reliability of the results. The results show that the Nifty index additions are associated with significant permanent abnormal returns in the complete, first and second period. However, the index effect has diminished in the second period. The information related explanations dominate in the complete and first period. The second period finds support for the downward sloping demand curve hypothesis. I extend the existing literature to a hitherto unexplored new sample period (2010-2018) in order to examine the price and non-price effects around Nifty index additions.
  PubDate: 2019-06-21
  DOI: 10.5296/ajfa.v11i1.14866
  Issue No: Vol. 11, No. 1 (2019)