Search results

1 – 10 of 18
Article
Publication date: 19 October 2022

Faisal Alnori and Abdullah Bugshan

This paper aims to provide a comprehensive investigation into the different roles of cash holding decisions on Shariah-compliant and non-Shariah-compliant firms’ performance…

Abstract

Purpose

This paper aims to provide a comprehensive investigation into the different roles of cash holding decisions on Shariah-compliant and non-Shariah-compliant firms’ performance. Therefore, the objective of this study is to analyze the significant relationship of liquidity on Shariah- and non-Shariah-compliant corporations.

Design/methodology/approach

This study sample includes non-financial firms listed in six Gulf Cooperation Council (GCC) markets between 2005 and 2019. The study uses panel fixed effects and the dynamic generalized method of moments (system-GMM) models to test the relationship between cash holding and firm performance. The firms’ performance is measured using four widely used proxies representing book and market measures of performance including return on assets, return on equity, earnings before interest and tax to total assets and Tobin’s Q.

Findings

The results explore that the nature of the relationship between cash holdings and performance varies across Shariah-compliant and non-Shariah-compliant firms. Specifically, cash holdings are positively and significantly related to Shariah-compliant firms’ performance. However, cash reserves are not significantly related to conventional firms’ performance. These findings indicate that Shariah-compliant firms rely more on their cash holdings to avoid costly and less available external financing, meet everyday business needs and invest in profitable projects. In contrast, the value for cash holding is less important for non-Shariah-compliant firms, as their external financing options are less restricted compared to Shariah-compliant firms.

Research limitations/implications

This study is not free from limitations. More specifically, the sample of this study comprises of firms listed in GCC countries, which share common features. It would be interesting for future research to examine the linkage between cash holdings and Shariah-compliant and conventional firms’ performance by applying a larger sample, such as firms located in countries of the Organization of Islamic Cooperation.

Practical implications

The findings of this paper provide useful insights for managers and investors on the important role of cash management for Shariah-compliant firms. Policymakers and bankers need to develop Shariah-based financial products to ease Islamic financing sources. Moreover, the findings of this paper call for more research on the importance of liquidity management for Shariah-compliant firms.

Originality/value

This study extends the Islamic finance literature by exploring the key role of cash holdings to Shariah-compliant firms. To the best of the authors’ knowledge, this study is the first study to investigate cash holdings and performance between Shariah-compliant and non-Shariah-compliant firms.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 16 no. 3
Type: Research Article
ISSN: 1753-8394

Keywords

Article
Publication date: 22 August 2023

Abdullah Bugshan, Faisal Alnori and Husam Ananzeh

This paper examines the influence of Shariah compliance (SC) on firms' net working capital (NWC) target and adjustment speed.

Abstract

Purpose

This paper examines the influence of Shariah compliance (SC) on firms' net working capital (NWC) target and adjustment speed.

Design/methodology/approach

The study samples of non-financial firms taken from six Gulf Cooperation countries between 2005 and 2019 and employs static and dynamic models to answer the present study research questions.

Findings

The outcomes of the study indicate that SC is one of the major determinants of the decision made by the corporation regarding their NWC. More specifically, enterprises that are compliant with restrictions within Shariah are seen to have laid targets of their NWC at a level that exceeds that of enterprises that are not compliant. Furthermore, compared to conventional firms, they seem to have higher speed when adjusting to meet set NWC targets. Submission to Islamic laws limits the choices from which an enterprise can outsource capital from existing funding instruments. Therefore, they experience a higher expected cost of bankruptcy. That being the case, such financial managers should readily maintain and adjust to higher NWC targets to meet current corporate needs, alleviate the risk of bankruptcy and lower dependency on expensive external funding options.

Originality/value

To the authors’ knowledge, this is the first study to explore the influence of SC on firms' NWC target and adjustment speed.

Details

International Journal of Emerging Markets, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 21 December 2021

Faisal Alnori, Abdullah Bugshan and Walid Bakry

The purpose of this study is to investigate the difference between the determinants of cash holdings of Shariah-compliant and non-Shariah-compliant firms, for non-financial…

Abstract

Purpose

The purpose of this study is to investigate the difference between the determinants of cash holdings of Shariah-compliant and non-Shariah-compliant firms, for non-financial corporations in the Gulf Cooperation Council (GCC).

Design/methodology/approach

The data include all non-financial firms listed in six GCC markets over a period 2005–2019. The IdealRatings database is used to identify Shariah-compliant firms in the GCC. To examine the determinants of cash holdings, a static model is used. To confirm the applicability of the method applied, the Breusch–Pagan Lagrange Multiplier (LM) and Hausman (1978) are used to choose the most efficient and consistent static panel regression.

Findings

The results show that, for Shariah-compliant firms, the relevant determinants of cash holdings are leverage, profitability, capital expenditure, net working capital and operating cash flow. For non-Shariah-compliant firms, the only relevant determinants of cash holdings are leverage, net working capital and operating cash flow. The findings suggest that the cash holding decisions of Shariah-compliant firms can be best explained using the pecking order theory. This reveals that Shariah-compliant firms use liquid assets as their first financing option, due to the Shariah regulations.

Research limitations/implications

Future studies may investigate the optimal levels of cash holdings and compare the adjustment speeds toward target cash holdings of both the Shariah-compliant firms and their conventional counterparts.

Originality/value

This study is the first to investigate the difference between the determinants of cash holdings of Shariah-compliant and non-Shariah-compliant firms.

Details

Managerial Finance, vol. 48 no. 3
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 10 August 2023

Abdullah Bugshan and Walid Bakry

This paper aims to examine the relationship between Shariah compliance and corporate capital structure decisions. This study explores the variation of capital structure speed of…

Abstract

Purpose

This paper aims to examine the relationship between Shariah compliance and corporate capital structure decisions. This study explores the variation of capital structure speed of adjustment.

Design/methodology/approach

The authors’ sample includes a sample of the largest 200 nonfinancial firms trading in the Malaysian and Pakistan stock markets. This study uses ordinary least squares and dynamic two-step system generalized method of moments to test the hypotheses of the study.

Findings

The results show that Shariah-compliant firms use a lower level of leverage than the noncomplaint firms. Moreover, while both types of firms have optimal capital structures, the speed of adjustment toward the targets is slower for Shariah-complaint firms than non-Shariah-compliant firms. This variation can be seen through the different levels of market imperfection experienced by the two types of firms. Shariah-compliant firms follow Islamic rules that restrict the type and degree of leverage, thus affecting the availability of external funding to Shariah-compliant firms.

Research limitations/implications

The findings call for more development and innovation of financing instruments that comply with Shariah rules that will increase of supply of external funds for Shariah-compliant firms and, thus, reduce market imperfections that are faced by Shariah-compliant firms.

Originality/value

The study contributes to the limited number of studies that examine the nexus between conventional corporate theories and Islamic corporate finance.

Details

Journal of Islamic Accounting and Business Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1759-0817

Keywords

Article
Publication date: 17 March 2022

Abdullah Bugshan, Sally Alnahdi, Husam Ananzeh and Faisal Alnori

Since it is believed that economic growth in oil-rich countries is highly influenced by oil price movements, this study aims to explore the relationship between oil price…

Abstract

Purpose

Since it is believed that economic growth in oil-rich countries is highly influenced by oil price movements, this study aims to explore the relationship between oil price volatility (uncertainty) and earnings-management decisions.

Design/methodology/approach

Financial data from oil-exporting countries were used to explore the relationship between oil price volatility and earnings-management decisions. The study used univariate and multivariate analysis. The modified Jones model is the proxy accrual earnings management. Further, the standard deviation of daily oil price returns is used to proxy annualised oil price volatility.

Findings

The results show that there is an association between oil price volatility and accrual earnings management. Specifically, there is a positive and significant relationship between negative accruals and oil price volatility, indicating that firms are inclined to conduct income-decreasing earnings management in periods of high oil price volatility.

Research limitations/implications

This study’s findings have important implications for regulators and investors because they indicate that the uncertainty of oil price volatility has an influence on earnings quality in oil-dependent economies. This is especially important considering the ongoing debate on transparency issues.

Originality/value

To the best of the authors’ knowledge, this study is the first to investigate the relationship between oil prices volatility and earning management behaviour for non-financial firms. Further, the study uses unique data of oil-dependent economies.

Article
Publication date: 10 June 2021

Abdullah Bugshan, Walid Bakry and Yongqing Li

This study examines the impact of oil price volatility on firm profitability. As Shariah-compliant firms operate under restrictions, the study also explores whether oil price…

Abstract

Purpose

This study examines the impact of oil price volatility on firm profitability. As Shariah-compliant firms operate under restrictions, the study also explores whether oil price volatility affects Shariah-compliant firms differently from their non-Shariah-compliant counterparts.

Design/methodology/approach

The study sample includes all non-financial firms listed on Gulf Cooperation Council stock exchanges from 2005 to 2019. In evaluating the oil price volatility–profitability relationship, static (panel fixed effects) and dynamic (system generalised method of moments) models were used.

Findings

Oil price volatility significantly depresses firm profitability. In addition, Shariah-compliant firms are more significantly affected by oil price volatility than their non-Shariah-compliant peers. The results suggest that high oil price volatility exposes Shariah-compliant firms to higher bankruptcy risk than non-Shariah-compliant firms and that positive and negative oil price shocks have asymmetric effects on firm performance.

Research limitations/implications

The findings of the paper call for more economic diversification by supporting non-oil sectors in the region and raise the need for more development of Islam-compliant products that compete with traditional instruments to help Shariah-compliant firms cope with uncertainty. Moreover, managers need to prepare quick alert and response procedures to reduce the negative impacts of oil price volatility on profitability.

Originality/value

To the best of the authors’ knowledge, this study is the first to explore the relationship between oil price volatility and profitability of non-financial firms. Further, the study extends prior Islamic corporate finance literature by enhancing the understanding of how Islamic corporate decisions affect firm performance during instability.

Details

International Journal of Emerging Markets, vol. 18 no. 5
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 8 March 2022

Husam Ananzeh, Hashem Alshurafat, Abdullah Bugshan and Khaled Hussainey

This paper aims to examine the impact of corporate governance mechanisms on forward-looking corporate social responsibility (CSR) disclosure (FCSRD).

Abstract

Purpose

This paper aims to examine the impact of corporate governance mechanisms on forward-looking corporate social responsibility (CSR) disclosure (FCSRD).

Design/methodology/approach

The authors use the manual content analysis to measure FCSRD for a sample of 94 companies listed on the Amman Stock Exchange from 2010 to 2016. Data on companies' FCSRD are manually collected from annual reports. The authors also use regression analyses to test the research hypotheses.

Findings

The authors find that board size positively affects FCSRD, while CEO duality and family ownership negatively impact FCSRD.

Originality/value

To the best of the authors’ knowledge, this is the first evidence of how governance mechanisms affect FCSR information in corporate annual reports in a developing country.

Details

Journal of Financial Reporting and Accounting, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 1 July 2022

Husam Ananzeh, Abdullah Bugshan and Ibrahim Amayreh

Given the increasing emphasis on environmental issues, this study attempts to offer concrete evidence on the relationship between ownership structure and environmental disclosure…

Abstract

Purpose

Given the increasing emphasis on environmental issues, this study attempts to offer concrete evidence on the relationship between ownership structure and environmental disclosure quality and whether media exposure moderates this relationship.

Design/methodology/approach

The sample adopted in this study includes a group of 94 Jordanian companies listed on the Amman Stock Exchange from 2010 to 2016. Data about companies' environmental disclosure were manually collected using the content analysis method.

Findings

Our findings reveal that increasing the levels of ownership concentration and management ownership can negatively impact the quality of environmental reporting among companies in Jordan. This type of reporting, however, is likely to be benefited from the presence of a high level of foreign ownership. In terms of the role played by media, media coverage may act as a buffer against the negative relationship between environmental reporting and ownership concentration and management ownership. On the other hand, the relationship between foreign ownership and environmental reporting remains positive and significant no matter the amount of media attention the company is receiving.

Originality/value

This study is crucial because it contributes to the existing environmental debate studies in two crucial ways. It first offers the first evidence on how media exposure can moderate the relationship between ownership structure and environmental disclosure. Second, this study's findings provide important implications for regulators and policymakers in Jordan.

Details

Management of Environmental Quality: An International Journal, vol. 34 no. 1
Type: Research Article
ISSN: 1477-7835

Keywords

Article
Publication date: 20 April 2023

Akmalia Mohamad Ariff, Norakma Abd Majid, Khairul Anuar Kamarudin, Ahmad Firdhauz Zainul Abidin and Siti Nurain Muhmad

This study aims to examine the association between environmental, social and governance (ESG) performance and cash holdings, as well as whether this association is moderated by…

Abstract

Purpose

This study aims to examine the association between environmental, social and governance (ESG) performance and cash holdings, as well as whether this association is moderated by Shariah-compliant status. The aim was to test the joint effect of two ethical precepts, namely, the ESG and Shariah-compliant status, in explaining variations in cash holdings.

Design/methodology/approach

A sample set that consisted of 9,244 firm-year observations from 25 countries from 2016 to 2020 was analysed using regression analysis. Firm-level data were sourced from Thomson Reuters and Refinitiv databases, while country-level data were derived from the World Bank and Hofstede Insights websites.

Findings

Firms with greater ESG performances were found to have higher cash holdings. The positive association between ESG performance and cash holdings was greater for Shariah-compliant firms compared to non-Shariah-compliant firms. In support of the stakeholder theory, the evidence indicated that Shariah-compliant firms with higher ESG commitments also have higher cash holdings as part of their corporate strategy.

Practical implications

These findings provided further comprehension to investors that ESG practices among Shariah-compliant firms are essential information during investment decision-making processes.

Social implications

These findings highlighted ethical corporate practices through two frameworks, namely, ESG commitment and Shariah compliance; hence, contributing towards strategies to reach the Sustainable Development Goal 16 of promoting just, peaceful and inclusive societies.

Originality/value

This study has focused on the motives for cash holdings by considering the ethical precepts embodying ESG and Shariah compliance to uphold the positive impact of high cash reserves.

Details

Journal of Islamic Accounting and Business Research, vol. 15 no. 3
Type: Research Article
ISSN: 1759-0817

Keywords

Content available
Book part
Publication date: 21 January 2022

Abstract

Details

Industry 4.0 and Global Businesses
Type: Book
ISBN: 978-1-80117-326-1

1 – 10 of 18