Showing papers in "Iranian Journal of Business and Economics in 2014"

The Impact of Intellectual Capital on The Performance of Islamic Banking

Abstract: Intellectual capital becomes the integral part in the development of successful organization lately. Most of the organizations and banks in Islamic countries and Iran are started to shift in practicing intellectual capital since knowing the important of it. Intellectual capital is defined as intangible assets that include technology, customer information, brand name, reputation and corporate culture that are invaluable to a firm‟s competitive power. In a contemporary business environment, intellectual capital is considered as the most critical strategic asset for the success of the organization. Intellectual capital is a life blood of the high -tech and knowledge intensive organizations. Banking sector is considered as a knowledge intensive segment. Therefore, there is a great need to nourish the concept and applications of intellectual capital in banking sector. In Islamic countries, banking sector is mainly based on conventional banking sector and Islamic banking sector. The purpose of this research is to consolidate these findings and investigate three elements of intellectual capital including human capital, structural capital and customer capital and their internal relations in the Islamic banking industry.

The Effects of Materiality Threshold and Managersۥ Voluntary Incentives on Disclosure of Information in the Financial Statement of Companies Listed in Tehran Stock Exchange

Abstract: In this research, mandatory and voluntary incentives of disclosure, in the financial statement as a whole, have been tested. A sample of 98 companies active in Tehran stock exchange (TSE) and audited by Iran Auditing Organization (IAO) selected to test the research hypotheses. Study period selected, 1379 and 1380, as the fiscal year of before and after of the obligation to comply audit manual partially revised to include audit risk management as a base for materiality threshold. Research results is showed statistically significant impact of disclosure variables, include materiality threshold, earning response coefficient (ERC), proprietary cost (pc), on the disclosure in the financial statements. But the impact for the amount of capital provided by the company was no statistically significant.

A tripartite financial rating framework for the banking industry: financial performance, strength and distress rating

Abstract: Financial evaluation is the part and parcel of the business performance evaluation and it is more tangibly discussed in the banking industry due to the central role that banks play in the supply and demand mechanisms of money and credit in the economic system.However, financial evaluation, by and large,has been confined to financial performance assessment. In this study, we present a tripartite framework for assessing and rating banks in accordance with their financial performance, financial strength and financial distress status using 33 criteria. We utilize entropy and TOPSIS methods respectively for weighting and rating of banks. We utilize data from ten commercial banks listed on Tehran Stock Exchange (TSE). The contributions of the study is two-fold. Firstly, we utilize diverse quantitative and qualitative factors to account for the financial performance, financial strength and financial distress positions of the banks which give new perspectives into the financial stability of the banks. Secondly, the proposedframework can be used extensively in the banking industry as well as other settings for short-term, medium-term and long-term evaluations.The result of the study shows that banks A10, A6 and A3 have averaged the best along all three ratings. KEYWORD Financial Performance, Financial Strength, TOPSIS, Rating, Banking. INTRODUCTION inancial stability evaluation is the fulcrum of the banks’ overall performance evaluation and its significance has been doubled since the failure of the banking system and the shattering of the creditors’ confidence due to the frailties in the banks’ governance structure and investors’ foci on *Corresponding Author: Amir HosseinRahdari E-mail: Ah.rahdari@modares.ac.ir Telephone Number: +98 9127197785 myopic short-term-oriented measures during the financial crisis.Financial industry is ranked as the third industry on Tehran Stock Exchange (TSE) based on market capitalization and banking is the most important sector of financial industry by taking 71% of the value of the industry [1]. While banks have outperform most of the other industries except for petrochemicals in the recent years, their financial ranking is based on a limited market-oriented model that cannot reflect their long-term financial viability. Furthermore, due the paucity of presence of local or International rating agencies in a number of developing countries including Iran, rating systems, frameworks and indices that enable researchers and professionals to evaluate financial performance of companies in a more effective and efficient manner are of great interest. Nonetheless, two precautions need to be taken. Firstly, the proposed rating systems should be both simple and applicable such that researcher and professionals can easily cultivate them using the available data. Secondly, it should be effective and can provide insightful information as to companies’ performance. There have been some efforts in evaluating the banks performance in Iran. For instance, Shaverdi used TOPSIS, VIKOR and ELECTRE and integrated them with BSC to evaluate the performance of three private banks. No significant difference was found between TOPSIS, VIKOR and ELECTRE rankings [2]. This study focuses on presenting a tripartite rating framework using Entropy-TOPSIS that evaluates financial performance, financial strength and financial distress using 33 criteria in the banking industry. The information required for such evaluation is publically available through financial statements and other reporting media. Our use of Piotroski’s construct is circumscribed to its criteria rather than its explanatory power and theoretical implications. Therefore, we use the appellation of financial distress rating for this construct.The rest of the paper is organized in the following manner. First, the chosen measures and the raison d'être behind their selection alongside the proposed tripartite financial rating framework will be explained. Then, the A Tripartite Financial Rating Framework for the Banking Industry: Financial Performance, Strength and Distress Rating Amir HosseinRahdari 1, *, Armin Vojoudi Nobakht 2 and Omid EsmailPour 3 1 Tarbiat Modares University, Tehran, Iran 2 AllamehTabatabaiUniversity, Tehran, Iran Islamic Azad University, Science and Research Branch, Qom, Iran

The Impact of Entrepreneurial Orientation on Performance of Banks with Emphasis on the Mediating Role of Market Orientation (Case study: Public and Private Banks of Guilan Province)

Abstract: Entrepreneurship as a new phenomenon in economy and trade, with a wide variety of interactive multi-level orientation, play a key role in determining and improving the performance. The aim of this study was to evaluate the effect of entrepreneurial orientation on performance of banks with regard to market orientation as a mediator in the relationship between these two variables. In this study, since the entrepreneurial orientation complex nature and diversity of the five key elements as: Innovativeness, risk taking, Autonomy, Proactiveness and Competitive aggressiveness is used to measure this concept. On the other hand, according to various models for measuring market orientation of three elements: customer orientation, competitor orientation and inter-functional coordination of many experts agree that marketing science is used to measure market orientation will be taken. Finally, although there is no agreement among researchers on selected performance criteria in this study, three measures of market performance, customer performance and financial performance of the integrity of multiple applications and have more to measure the performance of verified banks used. To this propose, three hypotheses were formulated. To gather the necessary data to test hypotheses and analyze the data, a standard questionnaire containing 37 questions was used in 11 dimensions the 234 executives between public and private banks in the guilan province, a population survey was distributed. reliability using Cronbach's alpha were measured using Spss software. Test results showed that the reliability coefficient of 0.73 and the reliability is given. On the other hand, the validity of this bank managers and professionals and academics examined and confirmed the validity of the questionnaire. Since this is the most descriptive and causal, data analysis and hypothesis testing of factor analysis and path analysis were used. All analyzes were also conducted using LISREL software. Test hypotheses also confirm that the impact of market orientation on performance in general between entrepreneurial orientation and performance directly and Also indirectly through orientation and significant relationship exists between market orientation has a significant effect on the relationship. Finally, according to the research findings, recommendations for the development of entrepreneurial orientation on the banks offered.

The comparison of the effects of inflation rate, interest rate, exchange rate and liquidity growth rate on export-based industries with import-based industries

Abstract: This study compares the effect of variables including inflation rate, interest rates, exchange rates and liquidity growth rate on return of sales of the export-based with import-based industries. To do this, the data of chemical and automobile industry are discussed for the period 2007 to 2012. To find the effects and determining the relationship between studied variables, random coefficients regression method is used by panel data. The results show that in exportbased industries, the relationship between inflation rate, exchange rate, and liquidity growth rate with return of sales is positive and significant, but in import-based industries, this relationship is inverse and significant .Also, the relationship between bank interest rates with the return of sales is negative and inverse. And in the import-based industries, this relationship is direct and significant. The result of Wald test showing the overall significance regression indicated that, inflation rates, bank interest rates, exchange rates and liquidity growth rate, on return of sales are effective in two chemical and automobile industries.

Cooperation or non-cooperation: a bargaining game model between mobile operator and financial institution in mobile payment market

Abstract: With the growing prevalence of the electronic commerce and the widespread use of mobile Internet and mobile payment, a new type of channel is emerging, called mobile commerce, or m-commerce. Mobile payment business has become the key of mobile value-added business. The major players in the mobile payment market are carrying on an intensive competition to grab market share to maximize profits. In this paper, the game between mobile operators and financial institution is studied on the basis of Nash Bargaining game theory. We propose a game theoretical framework that will help the mobile operators and the financial institution to determine the optimal strategy to cooperation or non cooperation. Then, the influences of cooperation costs and betrayal incomes in the cooperation strategies between the parties are analyzed. The result shows that the cooperation of both sides has a negative relation with the cooperation costs and betrayal income; with the increase of cooperation costs and betrayal incomes, the parties will not be willing to cooperative.

Study of the relation between ownership structure and corporations' tax avoidance

Abstract: The current study examines the effect of ownership structure on corporations' tax avoidance in the Stock Exchange Market. The aim of this study is to determine the effect of ownership structure on corporations' tax avoidance. Experimental results using data from a sample of 89 enterprises listed as the companies recognized by Tehran Stock Exchange Market in ten years (2002-2011) were adopted. Ownership structure was measured through block and institutional ownership and tax avoidance through two criteria of effective rate of cash tax and permanent tax difference. The results showed that there is a significant and negative relation between block ownership and the criterion of permanent tax difference and no significant relation was found with the effective rate of cash tax. Meanwhile, no significant and negative relation was found between institutional ownership and criterion of permanent tax difference and no significant relation was located in the method of effective rate of cash tax either.

Effects of Sanctions on Foreign Investment in Iran

Abstract: Today due to the importance of investment and financing in the global economy, the economists and governments all agree on the vital importance of foreign investment and in their opinioninvestment important factor to create broad economic developments for all countries, especially developing countries. Foreign investmentis an appropriate tool for achieving low-risk economic development, employment, learningthe world techniques and increasing the capacity of domestic firms, as well as an important factor in financing economic projects and plans. We are going to investigate the impact of foreign investment sanctions on economic development and growth, capital market (stocks), and financing. Foreign investment can be a tool for growth and development and most countries, especially developing countries, which have lower liquidity, seeking to attract foreign investment for the implementation of their economic plans and economic and industrial growth, that's why foreign investment has broad political and economic dimensions. In this paper the author has attempted using descriptive and review method to state the effects of economic sanctions on Iran Foreign Investment, as well as the effects of increasing or decreasing investment foreign investment on Iran Economy. The study data has been also collected using books and scientific papers study and searching the credible databases. Finally, the author concludes that foreign investment is an important factor in the growth of underdeveloped or developing countries and financing is as plans facing a shortage of liquidity and in sanctioned countries cannot benefit from it.

Analysis effective financing methods of operating performance and offering of optimized financing structure for pegah company of isfahan

Abstract: Companies require finance resources to perform their activities and the resources would be provided through releasing ordinary and preferred stock to investors and borrowing or get loans from creditors. Some theories have addressed the issue that why firms choose a particular method of financing and what impact such choices would have on the firm performance. Using regression model and correlation analysis, the study has dealt with to examine the relationship between the size and type of financing by four performance measures of, rate of return on investment (ROI), financial efficiency of an organization, rate of return on equity (ROE), and the liquidity of Pegah Company of Isfahan during 1379 to 1392. Results of this study similar other local studies showed that except Equitymethod in this company, that has significant and positive relationship with rate of return on equity, other Equitymethods don’t have significant relationship with Performancemeasures.

Mathematical Modeling of Facility Location for Bank Earnings Maximization when Users Rank Facilities by Shorter Travel and Waiting Times

Abstract: In this study, it has been tried to determine the optimal location criteria of bank with Case Study Post Bank in the region’s seven of Tehran, Iran, with two main goals first gaining the largest market share and second, minimizing the distance between the customers’ access to bank. The optimal location criteria of bank was developed with four criteria include travel time, waiting time, service quality, reliability and warranty and advertising, which set by a questionnaire with AHP method of client. The population of the study has been included 60 randomly clients divided into five class from seven regional. The result has been showed that both travel time and waiting time are the highest rated. Therefore, based on these two criteria, the employer has been subjected to the maximum benefit of the branches. The research’s model has been solved using MATLAB software. The study area was divided into 81 nodes and the necessary data were obtained from the branches and seven regional council. Finally, the results has been showed that the model presented in this study are able to predict the location of optimum places.

Accrual reversals, earnings and stock returns

Abstract: In this study, a comprehensive examination of accrual reversal, and its effect on earnings and Stock Returns, for several items of accepted companies in Tehran Stock Exchange, has been done. This study aims to recognize the distinguished features of these accrual components by decomposing and discovering their relation with the mentioned items in adjacent years. To achieve that, the information of 83 companies during the time period of 1383-1391 has been reviewed.The selective approach for the hypothesis testing is of correlational and retrospective kind. The results show that accruals, arising from persistent growth in companies, consist of a process with a positive serial correlation which indicates that the anticipated future benefits of accruals, resulting from the growth take place and accruals, arising from temporary fluctuations in working capital, good accruals, and accrual estimation error involves a process with a negative serial correlation. And eventually, the effect of reversed trend of accruals on Earnings and Stock Returns has been investigated.

A Study of the Relationship Between Market Competition and Capital Structure of Companies Listed in Tehran's Stock Exchange

Abstract: Among the characteristics of the today emerging markets is the focus on the parameter of capital and effective methods in developing and maintaining the value of the corporation and the risk management of the corporation in finance market, which constitute one of the competitive scenes among the corporations in all of the markets. The purpose of this study is to investigate the relationship between the market competition and capital structure of the corporations. For this purpose, we investigated the Tehran's stock exchange by using the panel data regression model for the time period 2005 to 2009. The results suggest that there is a significant and positive relationship between competitiveness and the capital structure. Also, the results showed that there is no significant relationship between the size of the corporation, uniqueness of the assets, sales growth and the collateral value of the assets variables and the capital structure of the corporations. Moreover, there was a significant and positive relationship between the current ratio of the corporations and the capital structure, and a significant and negative relationship between profitability ratio, capability of generating internal resources, and non-debt tax shield variables and the capital structure.

The relationship between earnings quality and corporate social responsibility with emphasis on the stability of their performance

Abstract: This study examines the relationship between earnings quality and corporate social responsibility, with an emphasis on stability performance. In this study some variables including corporate social responsibility, firm size, the ratio of book value to market value of equity, adjusted ROA, great auditors, financial leverage and establishment duration are considered as independent variables. The four criteria of discretionary accruals, operating cash flows, discretionary operational and production costs have been chosen as the dependent variables. If the profit of a firm is lower than expected, this can reduce the price of the company considerably. High concentration of users on profit, increases its quality and accruals as an criterion of earnings quality has been considered. In addition to have the responsiveness responsibility to the owners, to legitimize their performance, economic enterprises should fulfill their social responsibility. To answer this question as there is an association between stability coefficient of performance of firms with accruals, operating cash flows and operational discretionary costs of production, of 90 companies in Tehran Stock Exchange in the period 2002 to 2011 , some firms are selected and Excel &Eviews software are used for data analysis.

The assessment of Relationship the Institutional Ownership on Aggregate Operating Accruals and Aggregate Non-operating Accruals Listed Companies in Tehran Stock Exchange

Abstract: The institutional ownership has been as one of the main and important element of capital mark during the recent decades. As the institution has done the large volume of the capital, this study ass the assessment of relationship the institutional ownership on Operating accruals and Non-operating accruals listed companies in Tehran Stock Exchange. The hypotheses of this study are according to Basso's conservatism theory (1997) and Lara and his colleagues model (2007). By using data of financial bills and the stock prices of 46 companies in Tehran Stock Exchange during 1390 to 1391 and by using the analysis way and line regression of some variables, the results show that the ownership of the companies has no meaningful effected on the Operating accruals and Non-operating accruals..