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Spectacular bankruptcies of the Orange County Investment Pool in December 1994 and Barings Bank in February 1995 mounted a pressure on the U.S. Financial Accounting Standards Board (FASB) to issue Statement No. 133, Accounting for Derivatives Instruments and Hedging Activities (FAS 133). Although measuring derivatives at fair value is a major improvement in accounting for derivatives, such type of accounting falls short of quantifying and reporting the risk of losses associated with derivative instruments. The purpose of this paper is to suggest an alternative approach to market valuation by integrating quantitative market risk estimation into the valuation method. The paper will use the Barings Bank experience to demonstrate how FAS no. 133 disclosure falls short of disclosing the magnitude of the market risk held by the bank at the end of 1994. It will also demonstrate how using a risk‐impacted value would have improved the disclosure of how much the bank stood to lose from their open positions.

The trust in participation banks depends largely on authentic dependence on Sharia, legal financial instruments and fair yet transparent distribution among account owners and banks. Taking into account the economic Islamic principles and those of mudarabah agreement, this study aims to identify problematic areas pertaining to profit sharing in addition to revealing opportunities leading to the improvement of the profit distribution system while developing a new profit distribution system proposal.

This study proposes two hypotheses (H). H1: There are partial deviations between the profit considered to be legal according to the economic principles of Islam and the practice of participation banking. H2: There are partial deviations or loss of right in practice between the mudarabah contract concluded among owners of participation account and participation banks. In-depth interview technique and review of the literature including legislation were used to determine the parameters affecting the distributed profit. The collected data was tested through comparison with the theoretical framework of the mudarabah contract.

There are two separate fund pools used in participation banks, including equity and participation accounts. Managers’ selection of pools set according to their personal goals related to balance sheet profit management may cause profit to pass between participation accounts and equity. Many issues negatively affect the distributed profits. For example, incomes from funding commissions, reserve requirements and idle funds, although they originate from participation accounts, are recorded in the bank’s income. In addition, the bank does not return the profit initially recorded in its own account to participation pools, whether or not profit.

The interviewed officials were cautious to avoid a negative perception of the sector. This made it difficult to determine the real situation of applications decided with initiative in profit distribution. Although the authorization documents have partially been published, it is still difficult to access most licensed documents. There is no independent audit report made considering the interest-free banking principles regarding the profit distribution system of participation banking. The scarcity of the literature on the subject is another limitation. The research does not cause any harm to the reputation of participation banks.

Adopting a single-pool system in line with the global practices will end the shift of right between pools while ensuring a fair and transparent system. In this system, the bank equities, other shareholders’ funds and participation accounts are collected and operated in a single pool. The pool profit and loss are distributed as per the shares in the pool. The profit per each participation account is distributed based on the share of each participation account in the pool and profit-sharing ratio.

Participation banking is expected to support the real economy by means of production, leasing, merchandising based on certain religious, ethical and contractual principles. Bringing funds of conservatives, that does not go to conventional banks for avoiding of interest, in the economy is expected to provide new sources to reduce the foreign dependency for the economy and to supply a financial alternative for the conservatives who stay away from interest-based economic activities. However, if this will represent an alternative to debt-based systems, then products, contracts, business processes and legislations driven according to interest-free banking principles should be developed.

This study introduces and analyzes a new proposal of the profit distribution system of participation banking. A similar methodology is used in interest-free banking on a global scale, especially in Malaysia, and is compatible with the profit distribution decisions in AAOIFI’s depositor accounts. However, this methodology is considered to be new as far as participation banking is concerned. The implementation of this new methodology will eliminate several problems identified in the profit distribution system of participation banks. This research provides an academic contribution to the participation banking profit distribution system and represents a reference material on the subject.

The International Accounting Standards Board (IASB) has justified the simplification of International Financial Reporting Standards (IFRS) for small- and medium-sized enterprises (SMEs) in several ways, but no effective justification for this simplification has been made based on the information needs of users. This study aims to provide empirical evidence of the decision usefulness of IFRS for SMEs from a prominent user group of SME financial statements – the banks.

This study uses a mixed-method approach. First, a survey was conducted on commercial bank lending officers to assess the usefulness of different disclosure items included in the SME financial statements. Second, semi-structured interviews were conducted with commercial bank lending officers to gain an in-depth insight into the appropriateness and economic consequences of the requirements of IFRS for SMEs on their lending decisions.

The findings show that commercial bank lending officers did not consider all the disclosure requirements presented to them to be equally important. Hence, to facilitate the actual needs of the users’ decision usefulness, it is imperative that when given the opportunity, users participate in the development of accounting standards.

The findings of this study will be of interest to accounting regulators for evaluating the successful implementation of IFRS for SMEs and planning the next review of IFRS for SMEs. The IASB and SME Implementation Group are presently considering ways to increase user involvement for the next review of IFRS for SMEs, and the findings of this study signify the need for user involvement in the standard setting process.

In recent years, there has been a growing tendency to establish closer ties among the Gulf Cooperation Council (GCC) countries (Bahrain, Saudi Arabia, Oman, Qatar, and United Arab Emirates) in economies and financial institutions. As a result, there is an increasing need for the harmonization of accounting regulations in order to improve cooperation and enhance the efficiency of the financial institutions among GCC countries. This study is an investigation of the accounting standards followed by the financial institutions in five GCC countries with some policy prescriptions for harmonization of the accounting regulations in GCC countries. This paper deals with accounting policies and practices, including loans and provisions, assets, investments, taxation, liabilities, foreign exchange, revenue recognization, and consolidation of GCC countries’ banking and other financial institutions.

In his review of 30 years of research in Prospect Theory, Barberis (2013) notes that support for Prospect Theory had come mainly from the laboratory. In this paper, I write about a recurring phenomenon in real life that is consistent with Prospect Theory predictions in decision-making loss domain. The 60 cases noted in this paper are associated with specific risk seekers that had cost more than $140 billion (an average of $2.33 billion per case). Given space consider– ations, I provide synopses for 14 cases. A few of these cases have been discussed in the extant literature in connection with internal control, but were not considered from the perspective of Prospect Theory. It is striking that these cases are costly, all participants are young men, and almost all had followed the gambler’s martingale strategy – i.e., double down. While these cases are informative about risk-seeking behavior, they are not sufficiently systematic to be subjected to stylized archival research methods.

The conceptual problem associated with marketing productivity analysis is examined followed by an examination of currrent practice in marketing productivity in the following areas — on the product line, in advertising and promotional mix, in the salesforce, in distribution and in customer activity tracking. It provides UK companies with some guidance on how they can improve their performance measurement using marketing information systems and reorganising existing information for more effective marketing action. The research concentrates on 50 well‐known British companies in oil, chemicals, various engineering disciplines, food, pharmaceuticals, insurance, construction and chain‐store retailing. The findings are based on 28 viable responses, and a further 21 (different) responses from companies which were personally visited. Although the research techniques need to be refined they conclude that the management of resources invested in marketing activities can never be refined to the point where an incremental investment in any specific marketing application can be measured with great accuracy. Yet a great deal of measurement is possible and marketing managers can be well enough informed about the behaviour of marketing inputs so that allocation decisions in future periods will benefit.?