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Article
Publication date: 15 May 2017

Basil Al-Najjar and Dana Al-Najjar

The purpose of this paper is to investigate the effect of external financing needs on both firm value and corporate governance mechanisms within the UK SME context. This…

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2042

Abstract

Purpose

The purpose of this paper is to investigate the effect of external financing needs on both firm value and corporate governance mechanisms within the UK SME context. This framework is of importance because of the limited external financial resources SMEs might face.

Design/methodology/approach

The authors consider the endogeneity problem between corporate governance mechanisms and firm value, and hence, the three stages least squares and the instrumental variables based on two stages least squares estimation methods are employed.

Findings

The authors find a positive relationship between external financing needs and firm value. In addition, the authors detect that size and profitability are positively associated with firm value in the sample. Concerning the corporate governance index (CGI), the authors detect that big SMEs and those with low-debt levels have better corporate governance structures.

Originality/value

The authors employ a CGI for the sample which is constructed using ten corporate governance variables. The authors also examine different factors that affect SMEs 2019 governance by applying different models including logistic analysis.

Details

Journal of Small Business and Enterprise Development, vol. 24 no. 2
Type: Research Article
ISSN: 1462-6004

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Article
Publication date: 5 June 2017

Basil Al-Najjar and Erhan Kilincarslan

The purpose of this paper is to investigate the impact of regulations, reforms and legal environment on dividend policy in a different institutional setting. Particularly…

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2114

Abstract

Purpose

The purpose of this paper is to investigate the impact of regulations, reforms and legal environment on dividend policy in a different institutional setting. Particularly, it examines the firm-level cash dividend behaviour of publicly listed firms in Turkey in the post-2003 period, since there were major economic and structural reforms as well as significant regulatory changes of dividend payout rules imposed by the supervisory bodies.

Design/methodology/approach

The paper focuses on a recent large panel data set of 264 Istanbul Stock Exchange (ISE)-listed firms over a ten-year period 2003-2012. First, it employs a modified specification of Lintner’s (1956) partial adjustment model for analysis regarding target payout ratio and dividend smoothing. Second, it performs a logit model for analysis in identifying the link between financial characteristics and the likelihood of paying dividends.

Findings

The results show that ISE firms now follow the same determinants as suggested by Lintner. They, indeed, have long-term payout ratios and adjust their cash dividends by a moderate level of smoothing, and therefore adopt stable dividend policies (although less stable policies compared to their counterparts in the developed US market) as a signalling mechanism over the period 2003-2012. Moreover, the results also report that ownership structure concentration affects the target payout ratio and dividend smoothing in the Turkish market. In addition, the results further show that more profitable, more mature and larger sized ISE firms are more likely to pay cash dividends, whereas ISE firms with higher investment opportunities and more debt are less likely to distribute cash dividends in the post-2003 period.

Originality/value

To the best of authors’ knowledge, this paper is the first major research that examines the implications of reforms and regulations on cash dividend payments and dividend smoothing over time in Turkey during its market integration process in the post-2003 period.

Details

International Journal of Managerial Finance, vol. 13 no. 3
Type: Research Article
ISSN: 1743-9132

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Article
Publication date: 3 January 2018

Basil Al-Najjar

The purpose of this paper is to investigate the effect of corporate governance factors on audit features, namely, audit fees and the selection of Big 4 audit firms within…

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1493

Abstract

Purpose

The purpose of this paper is to investigate the effect of corporate governance factors on audit features, namely, audit fees and the selection of Big 4 audit firms within the UK SMEs context.

Design/methodology/approach

The author uses different regression models to investigate the impact of corporate governance characteristics on audit features, and employs cross-sectional time series models as well as two-stage least squares technique. In addition, the author has used logit analysis to examine the effect of corporate governance factors on the selection of Big 4 audit firms.

Findings

The author provides new evidence that governance mechanisms in SMEs affect different audit features. The results show that corporate governance mechanisms are important in determining audit fees. The author detects a positive impact of board independence, audit meeting and board size on audit fees. The author also reports evidence that governance factors determine the selection of Big 4 audit firms. In particular, the author reports that independent directors and audit diligence positively affect the decision to select Big 4 audit firms.

Originality/value

This paper investigates the under-researched relationship between audit features and corporate governance using UK SMEs. In so doing, the author aims to provide new insights into this relationship within the SMEs context.

Details

Journal of Small Business and Enterprise Development, vol. 25 no. 1
Type: Research Article
ISSN: 1462-6004

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Article
Publication date: 13 March 2019

Basil Al-Najjar and Erhan Kilincarslan

The purpose of this paper is to shed light on the ongoing debate of dividend policy, which is considered one of the most controversial topics in corporate finance literature.

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1027

Abstract

Purpose

The purpose of this paper is to shed light on the ongoing debate of dividend policy, which is considered one of the most controversial topics in corporate finance literature.

Design/methodology/approach

The paper provides a survey of literature; it, first, outlines the main theoretical arguments of dividend policy and then critically discusses the most important and influential previous empirical studies in the dividend literature.

Findings

The analysis of literature review detects that no general consensus has yet been reached after many decades of investigation, despite extensive debate and countless research. Consequently, the main motivation for paying dividends is still unsolved and thus remains as a puzzle. In addition, there is no doubt that carrying the dividend debate into the context of emerging markets attaches more pieces to this puzzle.

Originality/value

This paper offers an updated and more comprehensive survey of literature by examining the relationship between theory and practice from both developed and emerging markets.

Details

International Journal of Managerial Finance, vol. 15 no. 2
Type: Research Article
ISSN: 1743-9132

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Article
Publication date: 1 February 2016

Basil Al-Najjar and Erhan Kilincarslan

This paper aims to investigate the impact of ownership structure on dividend policy of listed firms in Turkey. Particularly, it attempts to uncover the effects of family…

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4634

Abstract

Purpose

This paper aims to investigate the impact of ownership structure on dividend policy of listed firms in Turkey. Particularly, it attempts to uncover the effects of family involvement (through ownership and board representation), non-family blockholders (foreign investors, domestic financial institutions and the state) and minority shareholders on dividend decisions in the post-2003 period as it witnesses the major economic and structural reforms.

Design/methodology/approach

The paper uses alternative dividend policy measures (the probability of paying dividends, dividend payout ratio and dividend yield) and uses appropriate regression techniques (logit and tobit models) to test the research hypotheses, by focusing on a recent large panel dataset of 264 Istanbul Stock Exchange-listed firms (non-financial and non-utility) over a 10-year period 2003-2012.

Findings

The empirical results show that foreign and state ownership are associated with a less likelihood of paying dividends, while other ownership variables (family involvement, domestic financial institutions and minority shareholders) are insignificant in affecting the probability of paying dividends. However, all the ownership variables have a significantly negative impact on dividend payout ratio and dividend yield. Hence, the paper presents consistent evidence that increasing ownership of foreign investors and the state in general reduces the need for paying dividends in the Turkish market.

Research limitations/implications

Because of the absence of empirical research on how ownership structure may affect dividend policy and the data unavailability for earlier periods in Turkey, the paper cannot make comparison between the pre-and post-2003 periods. Nevertheless, this paper can be a valuable benchmark for further research.

Practical implications

The paper reveals that cash dividends are not used as a monitoring mechanism by investors in Turkey and the expropriation argument through dividends for Turkish families is relatively weak. Accordingly, the findings of this paper may benefit policymakers, investors and fellow researchers, who seek useful guidance from relevant literature.

Originality/value

To the best of the authors’ knowledge, this paper is the first to examine the link between ownership structure and dividend policy in Turkey after the implementation of major reforms in 2003.

Details

Corporate Governance: The International Journal of Business in Society, vol. 16 no. 1
Type: Research Article
ISSN: 1472-0701

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Article
Publication date: 4 April 2016

Suzan Abed, Basil Al-Najjar and Clare Roberts

This paper aims to investigate empirically the common alternative methods of measuring annual report narratives. Five alternative methods are employed, a weighted and…

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1687

Abstract

Purpose

This paper aims to investigate empirically the common alternative methods of measuring annual report narratives. Five alternative methods are employed, a weighted and un-weighted disclosure index and three textual coding systems, measuring the amount of space devoted to relevant disclosures.

Design/methodology/approach

The authors investigate the forward-looking voluntary disclosures of 30 UK non-financial companies. They employ descriptive analysis, correlation matrix, mean comparison t-test, rankings and multiple regression analysis of disclosure measures against determinants of corporate voluntary reporting.

Findings

The results reveal that while the alternative methods of forward-looking voluntary disclosure are highly correlated, important significant differences do nevertheless emerge. In particular, it appears important to measure volume rather than simply the existence or non-existence of each type of disclosure. Overall, we detect that the optimal method is content analysis by text-unit rather than by sentence.

Originality/value

This paper contributes to the extant literature in forward-looking disclosure by reporting important differences among alternative content analyses. However, the decision regarding whether this should be a computerised or a manual content analysis appears not to be driven by differences in the resulting measures. Rather, the choice is the outcome of a trade-off between the time involved in setting up coding rules for computerised analysis versus the time saved undertaking the analysis itself.

Details

Managerial Auditing Journal, vol. 31 no. 4/5
Type: Research Article
ISSN: 0268-6902

Keywords

Content available
Article
Publication date: 8 July 2014

Zahir Irani and Muhammad Kamal

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177

Abstract

Details

Journal of Enterprise Information Management, vol. 27 no. 4
Type: Research Article
ISSN: 1741-0398

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Article
Publication date: 16 August 2011

Basil Al‐Najjar and Khaled Hussainey

This paper seeks to explore the potential drivers of corporate capital structure.

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6463

Abstract

Purpose

This paper seeks to explore the potential drivers of corporate capital structure.

Design/methodology/approach

The paper applies both fixed effects panel models and random effects tobit models to examine this issue. A sample of 379 firms is used across the period from 1991 to 2002.

Findings

It is found that corporate characteristics (firm size, firm risk, firm growth rate, firm profitability and asset tangibility) and corporate governance characteristics (board size and outside directorships) are the main drivers of capital structure of UK firms. In addition, the results show that changing the definition of capital structure may result in changing the sign and the significance of these potential drivers.

Originality/value

The paper argues that another dimension of the capital structure puzzle can be introduced which is related to the definition of capital structure used in prior studies. It is worth noting that the aim of this paper is not to provide an optimal set of factors that may affect the decision of capital structure, but to highlight the effect of the different definitions of capital structure that can be used by different studies, which makes the comparison between such studies difficult or even erroneous.

Details

The Journal of Risk Finance, vol. 12 no. 4
Type: Research Article
ISSN: 1526-5943

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Article
Publication date: 8 July 2014

Dana Al-Najjar and Basil Al-Najjar

The purpose of this paper is to build a neural network system to predict corporate credit rating in Jordanian non-financial firms, using 19 different financial…

Abstract

Purpose

The purpose of this paper is to build a neural network system to predict corporate credit rating in Jordanian non-financial firms, using 19 different financial characteristics such as profitability, leverage ratios, liquidity, bankruptcy, and sales performance.

Design/methodology/approach

The study adopts two neural network techniques namely, Kohonen network and Back Propagation Neural Network (BPNN). Our sample includes the manufacturing firms that have provided the required financial information for the period from 2000 to 2007.

Findings

BPNN has successfully predicted firms with high performance gaining A rating and the bankrupted firms with D rating for the period from 2005 to 2007.

Originality/value

This study is the first study to investigate credit rating in Jordan using Neural Network technique.

Details

Journal of Enterprise Information Management, vol. 27 no. 4
Type: Research Article
ISSN: 1741-0398

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Article
Publication date: 18 December 2018

Harish Kumar Singla and Pradeepta Kumar Samanta

This paper aims to examine the determinants of the dividend policy of the construction companies in India.

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2446

Abstract

Purpose

This paper aims to examine the determinants of the dividend policy of the construction companies in India.

Design/methodology/approach

Data from 2011 to 2016 (six years) of 45 listed construction companies in India are collected, and a strong balanced panel is created. Dividend per share is dependent variable, and profitability, unstable earnings, institutional holding, cash flow, tangibility, liquidity, growth opportunities, age of the firm, life cycle, leverage, size of firm and taxation are explanatory variables. The panel is tested for stationarity and finally fixed and random-effect panel regression model with robust estimation option is performed.

Findings

The random effect model is found fit with an R2 of 62 per cent, and profitability, life cycle and size of the firm show a significant positive effect on dividend payment. Cash flow shows a negative significant relationship, indicating the presence of agency problem. Rest of the variables indicated an insignificant relationship.

Research limitations/implications

The study is carried out on a small sample of 45 companies with data of only six years. Further, there may be behavioral and psychological factors that drive the decision to declare dividend. Those factors have not been considered in present study. Despite considerable efforts, the author could not find more studies specific to the construction sector. Hence, the variables identified in the present study are more generic, even though a few sector-specific studies have been included.

Originality/value

The dividend policy determinants for the construction sector in India are investigated, and a comprehensive model based on 12 explanatory variables is tested to find the drivers of dividend payout in Indian construction companies. From the investor’s point of view, the sector has immense potential in terms of dividend as well as capital appreciation. Therefore, the study can be useful to the investors to understand the drivers of dividend payout in the construction sector. It can also be crucial for companies to create an appropriate dividend policy so as to attract and retain investors. The study contributes significantly to the existing body of knowledge by recommending the salient drivers of dividend payout in the construction sector based on a comprehensive dataset and using robust methodology.

Details

Journal of Financial Management of Property and Construction, vol. 24 no. 1
Type: Research Article
ISSN: 1366-4387

Keywords

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