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Article
Publication date: 11 February 2021

Moncef Guizani and Ahdi Noomen Ajmi

The purpose of this paper is to examine whether and how Islamic banks' financing affects corporate investment efficiency.

Abstract

Purpose

The purpose of this paper is to examine whether and how Islamic banks' financing affects corporate investment efficiency.

Design/methodology/approach

To achieve the research purpose, an empirical model was constructed to describe the relationship between Islamic banks' financing and corporate investment efficiency. The empirical model was tested through generalized method of moments (GMM) estimation technique using a panel data of 163 Malaysian listed firms for the period 2007–2017.

Findings

This study provides evidence that Islamic banks' financing plays an important role in enhancing investment efficiency and that this positive effect comes mainly from non-PLS contracts. Moreover, the results show that the effect of Islamic banks' financing in preventing suboptimal investments is stronger in the financial crisis period. The results also reveal that the contribution of Islamic banks' financing in reducing suboptimal investments is more prominent when firms face over-investment problems.

Research limitations/implications

This research contributes to the debate on the financial implications of Islamic banks' financing modes by exploring their effect on corporate investment efficiency.

Practical implications

From a managerial perspective, the research findings are beneficial to Islamic bank managers to the extent that they highlight the role of Islamic financial contracts in improving corporate investment efficiency. In addition, the lower effect of PLS contracts on investment efficiency implies that policymakers in Malaysia should multiply their efforts to further expand the PLS financing.

Originality/value

This paper offers some insights on the role of Islamic banks' financing in mitigating agency conflicts and reducing asymmetric information problems. It is the first attempt focusing on the role of Islamic financing in fostering corporate investment decisions.

Details

International Journal of Productivity and Performance Management, vol. 71 no. 5
Type: Research Article
ISSN: 1741-0401

Keywords

Article
Publication date: 12 July 2021

Moncef Guizani and Gaafar Abdalkrim

The purpose of this paper is to investigate the effect of Shariah compliance status on corporate cash holding decision.

Abstract

Purpose

The purpose of this paper is to investigate the effect of Shariah compliance status on corporate cash holding decision.

Design/methodology/approach

This study applies ordinary least square and generalized method of moments regression models for a sample of 178 Malaysian listed firms over the period 2008–2017.

Findings

The results show that Shariah compliance has positive impact on the level of cash reserves of firms. It is also found that Shariah-compliant (SC) firms quickly adjust their level of cash holdings toward a target level than non–Shariah-compliant (NSC) firms. These results can be explained by the restrictions imposed by Shariah rules on firms to sustain their compliance status. Further, the results reveal that SC firms are likely to hold more cash out of their cash flows. This is the expected result, as the firms operating within the ambit of Shariah rulings and regulations face external financing constraints.

Practical implications

This study has important implications for managers, policymakers and regulators. For managers, the study is an important reference to understand and design cash management policies by considering restrictions imposed by Shariah regulations. In particular, managers should pay more attention to periods of credit crunch and weak economic conditions in which SC firms may be exposed to greater bankruptcy risks. For policymakers and regulators, this study may be useful in assessing the effect of the restrictions imposed by Shariah law on firm’s cash holding decision. Therefore, in an effort to increase the supply of external financing available to SC firms, policymakers should encourage the issuing of Islamic financial products.

Originality/value

This paper focuses on SC firms where financial constraints are bound to be more stringent than for NSC firms. It explores the implications of relevant Islamic principles on corporate cash holdings.

Details

Pacific Accounting Review, vol. 33 no. 4
Type: Research Article
ISSN: 0114-0582

Keywords

Article
Publication date: 16 April 2018

Moncef Guizani

This paper aims to examine the mediating effect of dividend payout on the relationship between internal governance mechanisms (board of directors and ownership structure…

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Abstract

Purpose

This paper aims to examine the mediating effect of dividend payout on the relationship between internal governance mechanisms (board of directors and ownership structure) and the free cash flow level.

Design/methodology/approach

Linear regression models are used to investigate such relationships applying data from a sample of 207 non-financial firms listed on the Gulf Cooperation Council countries’ stock markets between 2009 and 2016. To test the significance of mediating effect, the author uses the Sobel test.

Findings

The author finds a partial mediation effect of dividend on the relationship between both board independence and managerial ownership and the level of free cash flow. The results confirm the major role of outside directors in corporate governance. This governance mechanism contributes to the protection of shareholders’ interests through a generous dividend policy. However, the author finds that large managerial shareholdings increase the level of free cash flow through lower dividend payouts. This result suggests that powerful managers follow their preference of retaining excess cash to their own interests.

Practical implications

This paper offers insights to policy-makers of emerging economies interested in the development of the corporate governance. This study provides guidance for firms in the construction and implementation of their own corporate governance policies.

Originality/value

The main contribution of the present paper is to examine the dividend payout as a potential mediating variable between internal governance mechanisms and free cash flow. Moreover, it highlights the issue of efficient management of substantial funds in Sharia-compliant and non-Sharia-compliant firms.

Details

Corporate Governance: The International Journal of Business in Society, vol. 18 no. 4
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 12 February 2021

Moncef Guizani and Gaafar Abdalkrim

This study aims to examine the mediating effect of board independence on the relationship between ownership structure and audit quality.

Abstract

Purpose

This study aims to examine the mediating effect of board independence on the relationship between ownership structure and audit quality.

Design/methodology/approach

The research uses generalized methods of moments regression to test the relationship between ownership structure and audit quality. The sample consists of 162 non-financial firms listed on the Gulf Cooperation Council stock markets between the years of 2009 and 2016. To test the significance of the mediating effect, this paper uses the Sobel test.

Findings

Empirical findings show that companies with higher family ownership are less likely to demand extensive audit services and, as a result, pay lower audit fees. Conversely, this study finds that companies with higher active and passive institutional ownership are more likely to engage high-quality auditors and pay larger audit fees. As for government ownership, it has no significant impact on audit fees. The results also reveal that the negative (positive) effect of family (institutional) ownership on audit quality follows the path through reducing (enhancing) board independence. Further tests are conducted and support the main findings.

Practical implications

This study has important implications for policymakers and regulators to address the conflict between controlling shareholders and minorities by promoting higher standards of audit quality. The study findings may be useful to investors, assisting them in making better-informed decisions and aids other interested parties in gaining a better understanding of the role played by ownership structure in audit quality. The study also contributes to the strategic board behavior by bringing a new perspective on how boards engage in monitoring by requesting external audit services. This behavior is likely to be influenced by the type of controlling shareholder.

Originality/value

The main contribution of the present paper is to examine the board composition as a potential mediating variable between ownership structure and audit quality. Moreover, it highlights the issue of improving governance mechanisms.

Details

Corporate Governance: The International Journal of Business in Society, vol. 21 no. 5
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 29 July 2021

Moncef Guizani and Ahdi Noomen Ajmi

This study aims to investigate the influence of macroeconomic conditions on corporate cash holdings in terms of their influence on the level of cash and the speed of…

Abstract

Purpose

This study aims to investigate the influence of macroeconomic conditions on corporate cash holdings in terms of their influence on the level of cash and the speed of adjustment of cash to target levels in the Gulf Cooperation Council countries (GCC).

Design/methodology/approach

The study employs both static and dynamic regression analyses considering a sample of 2,878 firm-year observations drawn from stock markets in GCC countries over the 2010–2018 period.

Findings

Consistent with the precautionary motive, the results show that GCC firms tend to accumulate cash reserves in weak economic periods. Evidence also reveals that the estimated adjustment coefficients from dynamic panel models show that GCC firms adjust more slowly toward their target cash ratio in periods of unfavorable economic conditions.

Practical implications

This study has important implications for managers, policymakers and regulators. For managers, the study is an important reference to understand and design cash management policies by considering financial constraints imposed by macroeconomic conditions. In particular, managers should pay more attention to periods of credit crunch and weak economic conditions in which firms may be exposed to greater bankruptcy risks. For policymakers and regulators, this study may be useful in assessing the effect of macroeconomic factors on firm's cash holding decision. Therefore, in an effort to increase the supply of external financing available to firms, policymakers may devise investment friendly environment by controlling macroeconomic factors.

Originality/value

This paper offers some insights on the macro determinants of cash holdings by investigating emerging economies. It explores the role of macroeconomic conditions on corporate cash holdings in terms of their influence on the costs of external funds and financial constraints.

Details

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

Keywords

Article
Publication date: 8 November 2022

Moncef Guizani and Gaafar Abdalkrim

The purpose of this study is to analyze the impact of board gender diversity (BGD) on working capital management (WCM) decision by scrutinizing different positions covered…

Abstract

Purpose

The purpose of this study is to analyze the impact of board gender diversity (BGD) on working capital management (WCM) decision by scrutinizing different positions covered by female board directors.

Design/methodology/approach

This study uses a panel data regression model with fixed effect estimations and the generalized method of moments (GMM) to determine the impact of BGD on WCM strategy. This study uses a panel data analysis for 277 non-financial firms listed on Bursa Malaysia over the period from 2011 to 2019.

Findings

The results of this study show that female directors fulfilling either monitoring or executive positions increase the investment in working capital (WC), suggesting a conservative WCM. Precisely, results from this study are consistent with the embedded risk aversion traits of female executives and, hence, preserve high level of investment in WC, which allows superior levels of liquidity to meet firms’ financial commitments. The results also show that Malaysia commitment to gender equality is a key moderator in the female directors – firm WCM relation. The authors find that when the level of gender equality is greater, female directors support firms in adopting aggressive WCM strategies.

Practical implications

This study’s findings provide insights for corporate decision-makers in helping them to determine the board’s design in term of roles and composition that enhances the efficiency of WC. The results also provide guidelines for policymakers and regulators to formulate strategies that support more female board representation. In this way, firms should appoint more female directors on their boards to ensure prudent WC decisions. Moreover, given that female directors are an important determinant of a firm’s WC policy, investors and various internal or external monitoring groups need to factor boardroom gender diversity into their investing, hiring and monitoring mechanisms.

Originality/value

While prior research has examined the effect of BGD on firm performance, to the best of the authors’ knowledge, this study is the first to investigate the effect of BGD on the WCM decision.

Details

Management Research Review, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2040-8269

Keywords

Article
Publication date: 11 April 2022

Moncef Guizani and Gaafar Abdalkrim

The purpose of this paper is to examine the impact of board gender diversity on firm financial distress for a sample of 367 non-financial firms listed on Bursa Malaysia…

Abstract

Purpose

The purpose of this paper is to examine the impact of board gender diversity on firm financial distress for a sample of 367 non-financial firms listed on Bursa Malaysia over the period from 2011 to 2019.

Design/methodology/approach

The study employs both panel logistic regression and dynamic generalized method of moments estimator to determine the impact of board gender diversity on the likelihood of financial distress. Altman Z-score model is used as a proxy for financial distress indicator. The bigger the Z-score, the smaller the risk of financial distress.

Findings

The results show that board gender diversity could help to improve board effectiveness by preventing corporations from being too exposed to financial distress and bankruptcy. In particular, whether they are independent or inside members, women directors are likely to reduce the likelihood of financial distress. The results also show that the effect of female directors on the likelihood of financial distress is strengthened through more board independence. The results are consistent with those in prior research that documents the benefits of board gender diversity.

Practical implications

This paper provides insights for corporate decision makers in emerging economies, helping them to determine the board's design in terms of roles and composition that promote governance practices and prevent financial troubles. Furthermore, the findings of this study may be useful regulators as they shed light on the importance to undertake measures and reforms to promote board effectiveness by the introduction of gender diversity. Finally, this study also offers implications for society in general, considering that the practice of enhancing board gender diversity can significantly safeguard the interest of a wide range of stakeholders by reducing the chances of corporate bankruptcy.

Originality/value

While prior research has examined the effect of board gender diversity on firm performance, this study is the first to investigate the effect of board gender diversity on the likelihood of financial distress in Malaysia.

Details

Asia-Pacific Journal of Business Administration, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1757-4323

Keywords

Article
Publication date: 16 August 2021

Moncef Guizani and Gaafar Abdalkrim

This study aims to explore the role of board gender diversity in enhancing the allocation of free cash flow (FCF). It examines the direct effect of board gender diversity…

Abstract

Purpose

This study aims to explore the role of board gender diversity in enhancing the allocation of free cash flow (FCF). It examines the direct effect of board gender diversity, as well as its indirect effect, through debt and dividend policies, on the level of FCF.

Design/methodology/approach

This study applies a three-stage least squares regression analysis for a sample of 367 Malaysian listed firms over the period 2011–2019.

Findings

The results show that female directors significantly deter the opportunistic behavior of managers. The authors find that gender diversity – as measured by the percentage of women on the board and the percentage of female independent directors are likely to reduce excess funds. Moreover, the results reveal a significant indirect effect of board gender diversity, through dividend payouts, on the efficient allocation of FCF. The results are consistent with those in prior studies that document the benefits of board gender diversity.

Practical implications

The research findings are beneficial to policymakers, as it allows them to assess the importance of diversity on boards in the monitoring of the managers, particularly as it pertains to the allocation of excess funds. Furthermore, these findings have implications for regulators as they shed light on the importance to undertake measures and reforms to promote board effectiveness by the introduction of gender diversity.

Originality/value

While prior research has examined the effect of board gender diversity on firm performance, the study is the first to investigate both the direct and indirect effect of board gender diversity on the allocation of FCF.

Details

Management Research Review, vol. 45 no. 2
Type: Research Article
ISSN: 2040-8269

Keywords

Open Access
Article
Publication date: 13 September 2022

Gafar Abdalkrim and Moncef Guizani

This study investigates the effect of strategic internal critical factors on strategic alliance performance in an emerging market, the Kingdom of Saudi Arabia.

Abstract

Purpose

This study investigates the effect of strategic internal critical factors on strategic alliance performance in an emerging market, the Kingdom of Saudi Arabia.

Design/methodology/approach

Multivariate statistical analysis technique Partial Least Square-Squared Equation Model is used for data analysis considering a survey of 260 alliance managers.

Findings

Environmental complexity moderates the relationship between strategic internal critical factors and strategic performance. A significant positive effect of strategic internal critical factors on corporation strategic performance was found. It suggests that environment and strategic alliance enable alliance managers and decision-makers to translate alliance strategies and improve the overall organization’s performance outcome, productivity, efficiency, availability of a product and profitability.

Practical implications

The findings disseminate beneficial implications for alliance managers regarding how they can best use their capability to maximize alliance performance. Realizing the antecedents of strategic alliance performance allows a manager to be sensitive about the influent factors and try to improve the alliance performance.

Originality/value

This paper shows how to create associations between interfirm coordination as a framework of new ventures for implementing radical technological change, firm performance in the post-innovation period, industry and firm innovative output.

Details

Arab Gulf Journal of Scientific Research, vol. 40 no. 4
Type: Research Article
ISSN: 1985-9899

Keywords

Article
Publication date: 14 December 2020

Moncef Guizani

This paper aims to explore how Sharia principles could impact capital structure determinants and speed of adjustment of Islamic banks (IBs) compared to conventional banks…

Abstract

Purpose

This paper aims to explore how Sharia principles could impact capital structure determinants and speed of adjustment of Islamic banks (IBs) compared to conventional banks (CBs) in the Gulf Cooperation Council countries (GCC).

Design/methodology/approach

This study applies the autoregressive distributed lag (ARDL) approach for a sample of 69 banks listed on GCC stock markets over the period 2009–2018.

Findings

Regression results indicate that tangibility and bank size are positively related to book leverage of both IBs and CBs, whereas profitability, liquidity and risk are negatively related. For growth opportunities, the results show opposing effect on book leverage of IBs and CBs, regarding macroeconomic variables, the authors find that gross domestic product and financial development are negatively related to book leverage of both IBs and CBs, whereas oil price change is positively related. Moreover, the authors find that IBs slowly adjust their capital structure toward the desired leverage ratio than CBs. In sum, the capital structure of IBs appears to be driven by similar factors to those previously found in the corporate finance literature.

Research limitations/implications

This research contributes to the theory in re-validating capital structure theories on IBs. It helps understand the capital structure of IBs in comparison with CBs. It highlights some areas where further research on topics related to capital structure of IBs is needed.

Practical implications

The paper can contribute to policymakers and governance function in understanding the choice of capital structure for IBs within the bound of Sharia requirement in different economic climate through its relation with the macroeconomic variables. Practically, the directors and managers can predict the best capital structure to be achieved by IBs in ensuring their performance is at par, in their quest of additional capital.

Originality/value

This paper offers some insights on the determinants of capital structure by investigating IBs and CBs. It explores the implication of relevant Islamic principles on capital structure. Moreover, it analyses the determinants of capital structure using ARDL method that permits to identify the short-run and long-run relationships between capital structure and its main determinants.

Details

Journal of Islamic Accounting and Business Research, vol. 12 no. 1
Type: Research Article
ISSN: 1759-0817

Keywords

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