Showing papers in "Research Journal of Finance and Accounting in 2012"

Credit Risk and Profitability of Selected Banks in Ghana

Abstract: This study attempts to reveal the relationship between credit risk and profitability of some selected banks in Ghana. A panel data from six selected commercial banks covering the five-year period (2005-2009) was analyzed within the fixed effects framework. In Ghana, the average lending/interest rate is about 30% - 35% per annum. From the results credit risk (non-performing loan rate, net charge-off rate, and the pre-provision profit as a percentage of net total loans and advances) has a positive and significant relationship with bank profitability. This indicates that banks in Ghana enjoy high profitability in spite of high credit risk, contrary to the normal view held in previous studies that credit risk indicators are negatively related to profitability. Our results can be attributed to the prohibitive lending/interest rates, fees and commission (non- interest income) charged. Also, we found support for previous empirical works which depicted that bank size, bank growth and bank debt capital influence bank profitability positively and significantly. Keywords : Credit Risk, Profitability, Banks, Ghana.

Market Efficiency, Market Anomalies, Causes, Evidences, and Some Behavioral Aspects of Market Anomalies

Abstract: Market efficiency hypothesis suggests that markets are rational and their prices fully reflect all available information. Due to the timely actions of investors prices of stocks quickly adjust to the new information, and reflect all the available information. So no investor can beat the market by generating abnormal returns. But it is found in many stock exchanges of the world that these markets are not following the rules of EMH. The functioning of these stock markets deviate from the rules of EMH. These deviations are called anomalies. Anomalies could occur once and disappear, or could occur repeatedly. This literature survey is of its own type that discusses the occurrence of different type of calendar anomalies, technical anomalies and fundamental anomalies with their evidences in different stock markets around the world. The paper also discusses the opinion of different researchers about the possible causes of anomalies, how anomalies should be dealt, and what ere the behavioral aspects of anomalies. This issue is still a grey area for research. Key Words : EMH, CAPM, Calender Anomalies, Technical Anomalies, Fundamental Anomalies.

Impact of Capital Structure on Firms’ Financial Performance: Evidence from Pakistan

Abstract: This research examines the impact of capital structure on firms’ financial performance in Pakistan of top 100 consecutive companies in Karachi Stock Exchange for a period of four years from 2006 to 2009. Exponential generalized least square regression is used to test the relationship between capital structure and firms’ financial performance. The results show that all the three variables of capital structure, Current Liabilities to Total Asset, Long Term Liabilities to Total Asset, Total Liabilities to Total Assets, negatively impacts the Earning before Interest and Taxes, Return on Assets, Earning per Share and Net Profit Margin whereas Price Earning ratio shows negative relationship with Current Liabilities to Total Asset and positive relationship is found with Long Term Liabilities to Total Asset where the relationship is insignificant with , Total Liabilities to Total Assets. The results also indicate that Return on Equity has an insignificant impact on Current Liabilities to Total Asset and Total Liabilities to Total Assets but a positive relationship exists with Long Term Liabilities to Total Asset. These results, in general, lead to the conclusion that capital structure choice is an important determinant of financial performance of firms. This is the first study in Pakistan examining the relationship between firms’ performance and capital structure of top 100 consecutive companies in Karachi Stock Exchange for a period of four years. Keywords: Capital Structure, Firms’ Performance, Performance Measures, Profit, Pakistan.

Macroeconomic Determinants of Stock Market Development in Emerging Markets: Evidence from Kenya

Abstract: We examine macro-economic determinants of stock market development in Kenya for the period 2000 to 2009, using quarterly secondary data. The hypothesis on the existence of a co-integrated relationship between stock market development and macro-economic determinants is tested using Johansen-Julius co-integration technique. While an error correction model is used in estimating the relationship between macroeconomic variables, on the one hand, and stock market development on the other. The results indicate that macro-economic factors such as income level, banking sector development and stock market liquidity are important determinants of the development of the Nairobi Stock market. The results also show that macro-economic stability is not a significant predictor of the development of the securities market. Keywords: Stock market, macroeconomic factors, Kenya

Is There a Tradeoff between Outreach and Sustainability of Micro finance institutions? Evidence from Indian Microfinance Institutions (MFIs)

Abstract: There has been an argument in literature that the more Micro finance institutions (MFIs) aim for financial sustainability the less will be the impact on poverty reduction and hence, there is a tradeoff between outreach to the poor and financial sustainability. As part of empirical evidence on the ongoing debate, the paper has tried to examine a tradeoff between outreach to the poor and financial sustainability based on the recent (2009) data on 85 Indian MFIs using correlation matrix. In this regard, the finding of this study does not support a tradeoff between outreach and financial sustainability more specifically the simple correlation between average loan size (proxy to depth of outreach) and operational sustainability is found to be weak. Furthermore, the correlation between number of women borrowers (alternative proxy to outreach) and operational sustainability is also very weak. However, the study revealed that there is a strong positive correlation between the number of active borrowers (breadth of outreach) and operational sustainability. Key Words: Outreach, Sustainability, Tradeoff, Correlation, Indian MFIs.

Earnings Management and Corporate Governance in Nigeria

Abstract: Earnings management has received considerable attention in recent times. This is due to its linkage with the reliability of published accounting reports. Indication from the academic literature has shown that the practice of earnings management is quite extensive among publicly traded firms. In response to the demand for greater proportion of independent directors on corporate boards and the need for financial sophistication of audit committee members, this study examines the role of the board of directors and audit committee in preventing earnings management in Nigeria. Using a questionnaire survey, the study finds that board dominated by outside directors brings a greater breadth of experience to the firm and are in a better position to monitor and control managers, thereby reducing earnings management. It was also observed that audit committee whose members possess certain level of financial competencies would reduce the likelihood of earnings management. The study recommends that board composition should include greater proportion of independent outside directors with corporate experience. Audit committee members should be encouraged to possess a certain level of financial competencies in order to decrease the likelihood of earnings management. Keyword: Earnings management, audit committee, board composition, corporate governance, Nigeria

The Causal Relationship between Exchange Rates and Stock Prices in Kenya

Abstract: This study examined the causal relationship between foreign exchange rates and stock prices in Kenya from November 1993 to May 1999. The data set consisted of monthly observations of the NSE stock price index and the nominal Kenya shillings per US dollar exchange rates. The objective was to establish the causal linkages between leading prices in the foreign exchange market and the Nairobi Securities Exchange (NSE). The empirical results show that foreign exchange rates and stock prices are nonstationary both in first differences and level forms, and the two variables are integrated of order one, in Kenya. Secondly, we tested for cointegration between exchange rates and stock prices. The results show that the two variables are cointegrated. Thirdly, we used error-correction models instead of the classical Granger-causality tests since the two variables are cointegrated. The empirical results indicate that exchange rates Granger-causes stock prices in Kenya. Keywords: Exchange rate, Stock prices, Causality, Unit root, Error-correction models, Kenya

Determinants of Audit Delay in Nigerian Companies: Empirical Evidence

Abstract: This paper examines relationship between audit delay and several company characteristics in Nigeria. The objective of this study is to measure the extent of audit lag in Nigeria and to establish the impact of selected corporate attributes on audit delay in Nigeria. A sample of 20 quoted companies was selected for a period of 2009 to 2011. The audit delay for each of the companies revealed that it takes a minimum of 30 days and a maximum of 276 days for Nigerian companies to publish their annual reports. Nigeria listed companies take approximately two months on the average beyond their balance sheet date before they are finally ready for the presentation of the audited accounts to the shareholders at the annual general meetings. The results from the panel data which was estimated using Ordinary Least Square regression showed that the major determinants of audit delay in Nigeria include multinationality connections of companies, company size and audit fees paid to auditors. We therefore recommend that regulatory agencies in Nigeria should probe audit delay and formulate policies to enforce compliance with timely release of annual reports. Keywords: audit delay, audit lag, annual reports, company characteristics

Exchange Rate Volatility and Stock Market Behaviour: The Nigerian Experience

Abstract: This study examines the long-run and short-run effects of exchange rate on stock market development in Nigeria over 1985:12009:4 using the Johansen cointegration tests. A bi-variate model was specified and empirical results show a significant positive stock market performance to exchange rate in the short-run and a significant negative stock market performance to exchange rate in the long-run. The Granger causality test shows a strong evidence that the causation runs from exchange rate to stock market performance; implying that variations in the Nigerian stock market is explained by exchange rate volatility. Keywords: Johansen Cointegration Tests; Granger Causality Test; Exchange Rate Volatility; Stock Market performance.

Corporate Social Responsibility and Profitability of Nigeria Banks - A Causal Relationship

Abstract: The rising cost of running business organizations in Nigeria and the lack of basic infrastructure, as well as divergent views in the literature regarding the type of relationship that exists between CSR and Corporate performance have necessitated this paper that examined the relationship between corporate social responsibility and profitability in the Nigerian banking industry using First Bank of Nigeria (FBN) Plc as the case study. Annual reports formed the secondary source of data collection where the CSR expenditure and profit after tax for the period of 2001-2010 was used for the computational experiment. The data collected for this study were analysed using correlation and regression analysis. The hypothesis formulated was tested. The results of the regression analysis as showed the impact of corporate social responsibility expenditure on profitability in Nigeria banks which revealed (Beta= 0.945, p<.01). This means that for every unit change increment in the CSR expenditure will lead to .945 or 95% increase in the profit after tax of the company. The R-square was 0.893 which shows that CSR accounted for 89.3% of the variation in the profit after tax of First Bank Plc.The study concluded that there is positive relationship between banks CSR activities and profitability. The implications of this study include the need for banks to demonstrate high level of commitment to corporate social responsibility based on stakeholder theory in order to enhance their profitability in the long run. Keywords: CSR; banking; profitability; causal; stakeholder theory; Nigeria

Earnings Management to Avoid Earnings Decreases and Losses: Empirical Evidence from Islamic Banking Industry

Abstract: We use earnings distribution approach (EDA) to investigate whether and why Islamic banks manage reported earnings. First findings confirm the assumption that Islamic banks manage earnings to avoid reporting losses (with statistical tests) and earnings decreases (with visual evidence but without statistical tests). However, earning management phenomenon is not as obvious in Islamic banking institutions as in other non-Islamic institutions. That is, Islamic banking institutions practice earnings manipulations but not as well as non-Islamic institutions. Additionally findings show that prospect theory can explain the trade-off between risk and return, i.e., Islamic banks above the earnings threshold are found to be risk averters while banks below the earnings threshold are found to be risk seekers. Therefore, we have accepted the hypothesis that prospect theory explains Islamic banks’ motivation in managing earnings to exceed thresholds.

Tax System in Nigeria - Challenges and the Way Forward

Abstract: This paper discusses the challenging issues affecting the tax system in Nigeria. It is characterized by lack of statistical data, poor tax administration, and inability to prioritize tax effort, multiplicity of taxes and increase in underground economy. It also proffer challenges so as to engender an efficient and effective tax regime in Nigeria Keywords : Tax system, challenges, administration.

Management of Savings and Credit Cooperatives from the Perspective of Outreach and Sustainability: Evidence from Southern Tigrai of Ethiopia

Abstract: The rural economy and the urban economy in Ethiopia are largely disconnected .While urban banks have excess liquidity, which costs them money to manage, and some rural people have opportunities requiring credit to be profitable that are low risk, there is no mechanism to bring this liquidity from urban banks to rural businesses. Saving and Credit Cooperatives (SACCOs) can be the link that will give urban banks low risk loan opportunities in rural areas and give rural businesses access to credit at costs for lower than interest rates currently charged by moneylenders. So, this paper is concerned with management of SACCOs from the perspective of outreach and sustainability of Rural SACCOs to reach large number of members. The required data were obtained from members and SACCO documentation and analyzed using tables and percentages, financial ratios, and correlation analysis with the help of MINITAB, a statistical package. The descriptive findings show that membership and financial performance of the SACCOs under study showed an improving trend over the study period. The result of correlation analysis between independent variables and dependent variable showed that existence of strong positive correlation between financial performance (ROA) and the asset utilization. A moderate positive correlation relationship exists between operational efficiency and size of SACCOs (assets size). Conversely, there is a significant negative correlation between financial performance (ROA) and the operational efficiency with correlation coefficients. The study also came out with a range of perspectives on the factors affecting the outreach and sustainability of SACCOs under study. Lack of awareness and poor saving culture, weak organizational arrangement and governance, policy and regulatory environment, weak institutional capacity, low capital base, lack of differentiated products, inappropriate loan security requirements, and threats from other financial institutions (MFIs) were among the factors affecting the outreach and sustainability of SACCOs. Keywords : outreach, sustainability, savings and Credit Cooperatives, correlation analysis, Southern Tigrai, Ethiopia

Domestic Debt and the Growth of Nigerian Economy

Abstract: The study investigates the relationship between domestic debt and economic growth in Nigeria. The Ordinary Least Squares Method (OLS), Error Correction and parsimonious models are used to analyze quarterly data between 1994 and 2008. Our result shows that the domestic debt holding of government is far above a healthy threshold of 35 percent of bank deposit as the average over the period of study is 114.98 percent of bank deposit presenting evidence of crowding out of private investments. The study of course affirms that the level of debt has negative effect on economic growth. Government should maintain a debt- bank deposit ratio below 35 percent, resort to increase use of tax revenue to finance its projects and divest itself of all projects the private sector can handle while providing enabling environment for private sector investors such as tax holidays, subsidies, guarantees and most importantly improved infrastructure. Keywords: Budget deficit, debt size, domestic debt, economic growth and investment base

Bankers Perceptions of Electronic banking in Nigeria: A Review of Post Consolidation Experience

Abstract: Electronic banking has gained increasing popularity and thus attracted the attention of both academics and practitioners. This paper aims to collect bank employees' perceptions of the potential benefits and risks associated with electronic banking in Nigeria most especially the post consolidation era. Primary sources were used to collect the data and were analyzed via mean score analysis. The results suggest that bankers in Nigeria perceive electronic banking as tool for minimizing inconvenience, reducing transaction costs, altering customers queuing pattern and saving customers banking time. The consolidation era witnessed upsurge in Electronic banking. Similarly, bankers believed that electronic banking increases the chances of government access to public data, increases the chances of fraud and that there is a lack of information security. Keywords: Electronic banking, Electronic payment, bankers perception, post consolidation era, Nigerian banks, Cashless economy .

International Financial Reporting Standard (IFRS): Benefits, Obstacles And Intrigues For Implementation In Nigeria

Abstract: IFRS is International Financial Reporting System and International Accounting Standard Board – (IASB) provided the framework for its working. IFRS adopted by IASB has gained worldwide acceptance amongst many countries and some listed companies in European nations have embraced it. IFRS employs a uniform, single consistent accounting framework that is gravitating towards General Accepted Accounting Practice (GAPP) in the future. IFRS since its introduction in 2001 had provided uniform accounting in financial reporting which would enable investors to interpreted financial statements with minimum effort. Other countries, including Canada and India are expected to transit to IFRS by 2011. The Nigerian Accounting Standard Board (NASB) is not expected to lag behind in the implementation. This paper looks at the benefits of adopting IFRS, obstacles and intrigues expected from the implementation of IFRS. The article also analyzed the requirements that would assists in the implementation of IFRS in Nigeria. Using content analysis method, the paper amongst others recommended a continuous research in order to harmonize and converge with the international standards through mutual international understanding of corporate objectives and the building of human capacity that will support the preparation of financial statements in organization. Key words : IFRS, Convergence, adopted, IASB, NASB, GAPP.

Adoption of Point of Sale Terminals in Nigeria: Assessment of Consumers' Level of Satisfaction

Abstract: The adoption of Point of Sale Terminal for financial transaction is expected to reduce large volume of currency in circulation. However, the adoption of the e-payment system is comparatively lower to other payment systems in Nigeria. The study therefore investigates the level of consumers' satisfaction with adoption of e-payment system in Nigeria. Data for the study were elicited from bank customers and consumers of the product. Overall, the result indicates that fewer consumers were satisfied with the speed of transaction, level of service provided by the merchants, awareness, and security. These findings suggest opportunities for improving the consumers interface with POS technology in order to achieve the objective of cashless economy. Key words : e-payment, point of sale terminals, consumers

Relationship between Corporate Social Responsibility and Financial Performance in Islamic Banking

Abstract: The aim of this study is to evaluate the level of Corporate Social Responsibility Disclosure in Islamic banks and to analyze the relationship between performance indices Return On Average Assets (ROA) and Return On Equity (ROE) with the corporate social responsibility disclosure. An empirical analysis is conducted, based on the annual reports of 8 Islamic banks for years 2009 and 2010. A Corporate Social Responsibility Disclosure Index (CRSDI) is constructed. To verify the link between ROA, ROE and CSRDI, regression models are run. The results indicate a lack in disclosing Corporate Social Responsibility, and the regression models show that there is no relation statistically significant between performance indices (ROA, ROE) and CSRD index. Keywords : Islamic bank, ROA, ROE, Corporate Social Responsibility Disclosure, Regression, Content Analysis

An Analysis of the Impact of Mergers and Acquisitions on Commercial Banks Performance in Nigeria.

Abstract: Mergers and acquisitions (M&A) in the corporate world are achieving increasing importance and attention especially with the advent of intense globalization. This is evident from the magnitude and growth of deal values and resultant ‘mega-mergers’ transacted in recent times. This research work attempts to assess the implication of merger and acquisition of commercial banks in Nigeria on their profitability and other associated measures of performance. The research analysis used published audited accounts of ten (10) out of twenty-four (24) banks that emerged from the consolidation exercise and data from the Central Banks of Nigeria which consists of both primary data. The relevant data collected were analyzed and tested using simple percentage and tables. Subsequently, the three hypotheses formulated in this study were tested using correlation co-efficient (r2) and T-Test. The result of the analysis revealed that there is significant relationship between pre and post merger/acquisition capital base of commercial banks and level of profitability, there is significant difference between pre and post-merger acquisition earnings per shares. Merger/acquisition have also increased the capitalization of commercial banks with evidences of changes in company’s share ownership, increase in the cost of services and changes in bank lending rates. Based on these findings, it can be concluded that the merger and acquisition programme has improved the overall performances of banks significantly and also has contributed immensely to the growth of the real sector for sustainable development Key-words: Mergers and acquisitions, profitability, capitalization, commercial banks and Earnings per share

Fiscal Accountability Dilemma in Nigeria Public Sector: A Warning Model for Economic Retrogression

Abstract: The diagnostic survey conducted in 2001 into the Federal Government public procurement revealed that Nigeria lost several hundred billions of Naira over the last few decades due of flagrant abuse of procedures, lack of transparency and merit in the award of contracts in the public sector. Measures like legislative committees, financial audit, ministerial control, judicial reviews, anti­corruption agencies, advisory committees, parliamentary questions and public hearing to ensure accountability in the public sector as in developed countries were adopted yet no tangible result has been achieved. This study investigated accountability in the Nigerian Public Sector. The population of the study is Nigeria public sector and the sample frames was drawn from Ministry of Finance, Presidency, Ministry of Works, and National Assembly. Source of data was primary and were collected through structured questionnaire which was distributed to 100 management staff of the above organizations at random. Data were analyzed using Pearson Product Moment Correlation with the aid of SPSS. The result showed that there is weak accountability in Nigeria due to weak accounting infrastructure, poor regulatory framework and attitude of government officials. It was recommended that the government, professional accounting bodies and citizens should work together to have a meaningful resolution on this issue as a matter of urgency Key words: Accountability, Accounting infrastructure, Public Sector, Economic Retrogression

Government Accountability and Voluntary Tax Compliance in Nigeria

Abstract: This study examines the nexus between government accountability and voluntary tax compliance based on the theoretical framework that there exist a relational fiscal/social contract between the state and the citizens. Specifically, the hypothesis that voluntary tax compliance is influenced by the individuals’ perception of government accountability was specified and tested. Primary data elicited using structured likert scale questionnaire was used for the study while the Z- scores were computed and used to test the hypothesis. The Findings were in the affirmative indicating that the citizens’ perception of government accountability is an instrumental factor that shapes the emergence and maintenance of tax morale resulting in voluntary tax compliance. The study recommends is that to reduce tax gap, voluntary compliance should be motivated by improving the quality of public governance. Keywords: voluntary tax compliance, tax morale, government accountability.

The Impact of Environmental Accounting and Reporting on Sustainable Development in Nigeria

Abstract: The consumption of natural resources and incessant emissions of greenhouse gases in Nigeria are on the increase, and stakeholders are agitating increased information on organizations’ interactions with the environment. The study evaluated the relationship between environmental accounting and reporting and sustainable development in Nigeria. Pearson correlation coefficient and OLS were used for data analyses, and was discovered that there is a significant relationship between environmental accounting and reporting and sustainable development; that with environmental accounting encourage organizations to track their GHG emissions and other environmental data against reduction targets, and there are consequences for noncompliance with environmental accounting and reporting. It was recommended that acceptable standard such as ISAR be acknowledged and Graphical indicators be adopted illustrating to users on timely basis whether the organization is performing above, below, or in-line with the targets so that corrective actions can be taken as needed to successfully execute on sustainability initiatives. Keywords: Environmental Accounting, Sustainable Development, Ozone Layer Depletion, Green House Gases (GHG), Water Usage, Material Use, Energy Usage.

Difference in Gender Attitude in Investment Decision Making in India

Abstract: As women play a more active role, they also want to get the same attention, advice, terms and deals that men get from their wealth managers and advisers. Traditionally, the right to make investment decisions normally belongs to men. However, women today are making a bigger share of the decision over whether to invest in stocks, bonds or real estate. Specifically, in 2009, women decided how to allocate about $20 trillion in investments -- about 27% of the world's wealth, which is up by 16% from 2008. The objective of this study is to study the differences in the Investment Decision Making (IDM) process between female and male investors. In this study, chi-square test has been applied as statistical tool. The findings of this study are higher level of awareness for males than females for different investment avenues and Female investors tend to display less confidence in their investment decisions and hence have lower satisfaction levels. Key words : IDM, investment avenues, awareness, stereotypes, self-directed

A Trivariate Causality Test Among Economic Growth, Government Expenditure and Inflation Rate: Evidence from Nigeria

Abstract: This study examined the causal relationships among economic growth, government expenditure and inflation rate in Nigeria over the period 1970 to 2010. The study utilized both the Augmented Dickey-Fuller (ADF) and the Philip Perron tests to examine the properties of the variables. It was observed that the variables were found to be stationary, though not in their level form but in their first difference. In addition, the Johansen and Juselius (JJ) co-integration technique indicated the presence of co-integration among the variables while the tri-variate vector error correction model (VECM) showed the presence of bi-directional causality between government expenditures and economic growth both in the short run and in the long run. Also, it was revealed that in the short run a unidirectional causality existed from economic growth and government expenditure to inflation rate while no feedback from inflation rate was observed. Based on these findings, this study recommends that government should implement policies that would moderate government spending in order to reduce inflation rate. To compliment for the loss in economic growth through the reduction in government spending, lending rate should be moderated to encourage private investment in the Nigerian economy. Keywords: Economic growth, Government Expenditure, Inflation Rate, Trivariate Causality, VEC Model

Tax Administration and Revenue Generation of Lagos State Government, Nigeria

Abstract: The study examines the overall effectiveness of tax administration in relation to assessment, collection and remittance of tax in Lagos State, Nigeria. A survey questionnaire of the machinery of tax administration was carried out where 130 questionnaires were administered to analyse the opinion of civil servants directly connected with tax administration in the five Local government areas of Lagos State (Somulu, Mushin, Ikeja, Kosofe and Surulere). Hypothesis tested for the relationship which exists between tax administration, tax regulation and revenue generation. The Kendall measure was adopted and finding is that the tax administration in Lagos state is not totally efficient. Hence, tax administration affects the revenue generated by the government; also, there is a significant relationship between tax administration, tax policies and tax laws. The study therefore recommends that Lagos State Government could put in place a tax system that can enhance better administration of tax systems and tax collections should be left in the hands of private organisations. Keywords: Taxation, Administration, Revenue and Tax laws

The Relationship between Oil Price, Exchange Rate and Islamic Stock Market in Malaysia

Abstract: This research discusses the relationship between oil price, macroeconomic variables and Islamic stock market in Malaysia. The objective of this research is to analyze the dynamic effects of oil price and macroeconomic variables changes on Islamic stock market in Malaysia using an estimation of Vector Auto Regression (VAR) method. The variables involved in this research are Crude Oil Price (COP), Foreign exchange rates of Ringgit Malaysia - United States Dollar (MYR) and FTSE Bursa Malaysia Emas Shariah Index (FBMES). Using monthly data over the period January 2007 - December 2011, the study applies the co-integration analysis, multivariate Granger causality test, Impulse Response Function (IRF) and Variance Decomposition (VDC) analysis. The findings showed that Islamic stock prices are co-integrated with oil price and exchange rate variables. Based on cointegration relationship analysis, the Islamic stock price is positively and significantly related to the oil price variable but inversely and not significantly related to the exchange rate variable. Using Granger causality test, only oil price variable is Granger-caused by the Islamic stock return in Malaysia. Therefore, oil price shock will affect the Islamic stock return in the short and long run in Malaysia. Keywords: Malaysian, expenditure on education, economic growth, vector error correction model.

Factors for Using Derivatives: Evidence From Malaysian Non-Financial Companies

Abstract: This study attempts to uncover factors that could influence Malaysian non-financial companies to use derivatives to manage their risk. In addition, it also tries to identify the hedging theory that is relevant to the Malaysian market. Univariate statistics analysis indicates significance differences between derivative users and non-users of Malaysian non-financial companies. The findings from binary logistic regression reveal that only current ratios (LIQ2) and market-to-book value (MTBV) are the main factors influencing these companies to use derivatives. Additionally, this study suggests that the underinvestment cost hypothesis rather than the financial distress hypothesis that are commonly found in US and Australia companies. Keywords: derivatives, underinvestment cost hypothesis, financial distress hypothesis, market-to-book value

The Determinants of Internet Financial Reporting: Empirical Evidence from Nigeria

Abstract: This study investigated the major factors influencing internet financial reporting in Nigeria. Secondary data were sourced from the Annual Report and Accounts of the seventy-seven (77) sample firms and annual publications of the Nigerian Stock Exchange. The websites of the sampled companies were browsed for collecting data relating to financial reporting on the internet. The study revealed two major factors as influencing IFR in Nigeria. The firm’s size was positively and significantly correlated to the IFR practice. This implies that larger firms utilize IFR more than their counterparts. The results also showed that type of auditor was significant and positive for all the firms. This suggests that companies audited by firms affiliated with the Big Four international auditing firms were more likely to engage in Internet financial reporting. Keywords: Financial Reporting, Internet, Disclosure, Accounting Information

Crude Oil Price, Stock Price and Some Selected Macroeconomic Indicators: Implications on the Growth of Nigeria Economy

Abstract: This paper analyses the impact of crude oil price, stock price and some selected macro economics variables on the growth of Nigeria economy from 1980 to 2010. Using Johansen cointegration, unit root test and error correction model, it was found that crude oil price, stock price and exchange rate have significant influence on the growth of the Nigeria economy. In the final analysis, the study recommends that central bank of Nigeria should manage the dwindling nature of the interest rate, ensure transparency and accountability in the stock exchange market to boost the confidence of the investors and further as a matter of urgency diversify Nigeria economy from oil reliance to gainful manufacturing so as to minimize negative effects of oil shock. Keywords: crude oil prices, stock prices; macroeconomics; economic development.

Paper Review "Financial Liberalization, Crisis and Restructuring: A Comparative study of bank performance and bank governance in South East Asia Authors: Jonathan Williams, and Nghia Nguyen: Journal of Banking and Finance 29 (2005) 2119 - 2154"

Abstract: This paper examines the impact of changes in bank governance on bank performance for a sample of commercial banks operating in South East Asia between 1990 and 2003. To meet their objective, authors collect data from Bankscope and IBCA databases for bank financial statements whilst macroeconomic data were obtained from the IMF International Financial Statistics and the Asian Development Bank. To qualify bank ownership, authors relied on the aforementioned databases, bank websites, and academic sources that have detailed changes in banking ownership including privatizations.