Search

Hedging practices among Shari'ah compliant firms (ShC) are still not well explored and firms in Malaysia is very much lag behind in derivatives usage against firms in the developed countries. This study investigates the influence of financial derivatives usage on the value of Shari'ah and non-Shari'ah compliant firms (non-ShC) in Malaysia and compares the influence of derivatives usage on the value between the two categories of firms. To meet its objective, Generalized Method-of-Moment estimator (System-GMM) is employed on a set of panel data from 2000-2017. This study covers 200 firms engaged in derivatives which 59 firms are ShC firms and 141 are non-ShC firms. This study finds financial derivatives contribute positively to the value of Shari'ah compliant but negatively to the non-ShC firms. This study concludes that ShC performed better than its counterpart in risk management using derivatives. The findings enrich the current literature on the Islamic financial market and contribute to a better understanding relating to hedging activities. This study offers new evidence on risk management using derivatives in both Shari'ah and non-ShC firms and the importance of industrial diversification on firm value. This study suggests that the non-involvement in non-ShC firm's activities contributes to the lower risk profile hence a more effective risk management of the Shari'ah compliant firms. [ABSTRACT FROM AUTHOR]

This study examines the impact of Shariah Board (SB) characteristics on the financial and social performance of Islamic banks (IBs) from the perspectives of Agency Theory (AT), Stewardship Theory (ST) and the Resource Dependence Theory (RDT). To meet its objective, GMM is employed on a panel data of 15 IBs in Malaysia from 2010 to 2018 covering the pre and post implementation of IFSA 2013 with three performance measurements; ROA and ROE (financial performance) and Zakat over Equity (social performance). SB education, SB reputation, and SB expertise are positively related to IBs performance; while SB remuneration and SB cross membership are negatively related to performance. SB size is found to be insignificant. The study therefore concludes SB is relevant to the performance of IBs. The study also discusses the response of SB at the central bank (SAC-BNM) via its new ruling on financing restructuring in alleviating the hardship of IBs’ customers during the pandemic crisis. [ABSTRACT FROM AUTHOR]

This study aims to assess the impact of the revised Shariah approved firms screening method in relation to the levels of debt and the Shariah-approved firms' performance introduced by the Securities Commission (SC) of Malaysia in 2013- The period of the study is 2000 to 2014. Panel regressions were employed to examine the impact for the firms that are consistently Shariahapproved as determined by the SC of Malaysia. The regression result indicates a non-monotone association between Shariah-approved firms' performance and debt levels. The optimum level of debt, however, is much higher than the 33% benchmark set by SC. Therefore, it can be concluded that the 2013 revised Shariah- approved firms screening method, which introduced the 33% debt ratio benchmark, did not improve the performance of Shariah-approved firms for the period studied. Nevertheless, since the observations are only until 2014, it is possible that the observations might not have captured the true impact of the change. [ABSTRACT FROM AUTHOR]

Purpose: The purpose of this paper is to examine the effect of GST announcements (pre and post) on Malaysian stock market index. This study also utilised intraday data to look into intraday market volatility post-GST announcement. Design/methodology/approach: Both daily closing prices and intraday data of different frequencies are used to capture the extent of stock market volatility as well as the subsided period of the volatility. The period of study ranges from June 2009 to November 2016 and empirical estimation is based on the GARCH (1, 1) model for the pre- and post-GST announcements. Findings: Persistent market volatility in the post-GST announcement is empirically recorded and the volatility is higher in the post-GST announcement than the pre-GST announcement. This demonstrates the unwillingness and reaction of the market towards the tax policy implementation. Market expectation on GST implementation towards the increase in the cost of living following the increase in the prices of goods and services in Malaysia is empirically supported in the post-GST announcement. Practical implications: The finding on this study is consistent with the expectation of the market that GST implementation will increase the price of the goods and services and hence increase the cost of living. This is supported by a noticeable increase in the stock market volatility in the post-GST announcement. Although GST announcement could be classified as a scheduled announcement, unwillingness to accept the policy prevails as shown by the increase in the stock market volatility. Originality/value: The effects of Asian and global financial crisis are the major focus of past studies on stock market volatility, whereas this study examines and highlights the effect of the GST announcement on stock market volatility and the use of intraday data to further examine the nature of the volatility. [ABSTRACT FROM AUTHOR]

Islamic banks in Malaysia are beginning to response to calls for financial services that are responsible in providing social development impacts to the nation. Malaysia’s value-based intermediation strategy, initiated by the Bank Negara Malaysia is expected to move the Islamic finance industry to the next level of sustainable and long term economic development. Islamic banks are expected to not only focus on profit but also on contribution to societies through Islamic social finance. The traditional methods of Islamic social finance especially on the contribution of zakāt, waqf and ṣadaqah have been used to provide for the basic means of livelihood for the poor. Not only that, this shows that Islamic banks do not only concern on making profits but making contribution to the societies by involving in Islamic social finance through corporate social responsibility. Specifically, this study examines the impact of corporate social responsibilities particularly on the application of Islamic social finance which is zakāt contribution by Islamic banks on their financial performances namely return on assets, return on equity and operating profit. This study focuses on Islamic banks in Malaysia from 2011 to 2018. The financial information is extracted from Fitch Connect and annual reports of the respective Islamic banks which include 15 Islamic banks in Malaysia. The panel regression method was adopted to explain the three models and examine the impact of Islamic social finance on the financial performances of Islamic banks. The findings show that zakāt contribution has positive significant impact on Islamic banks’financial performance namely operating profit. Hence, the findings of this study offer policy implications by providing empirical evidence on the importance of Islamic social finance on the financial performance of Islamic banks. [ABSTRACT FROM AUTHOR]

Purpose This study aims to investigate the Malaysian retail investors and fund managers’ investment decision behaviours. The study offers an important opportunity for understanding the investors’ experiences, how they understand the Malaysian economy and their priorities for company selection. Other main aspects of this study are how investors mitigate the influence of emotions and psychological biases and challenges faced during investment decisions.Design/methodology/approach The researchers have mainly adopted an interpretivist approach for the present study. Qualitative data elicited through semi-structured interviews conducted with four retail investors and four fund managers were subjected to qualitative thematic analysis.Findings The results reveal that the investment decision processes of fund managers are more comprehensive than those of retail investors. Although both fund managers and retail investors acknowledge the influence of psychological biases on their investment decisions, the former use different and comprehensive approaches to mitigate such influences during investment decisions compared with the latter. Other important findings are how investors understand the Malaysian economy, their priorities for company selection and challenges faced during investment decisions.Research limitations/implications The researchers have interviewed eight carefully selected interviewees across retail investors and fund managers divide. Adopting other grouping criteria, focus group discussion with more respondents or adopting a mixed-methods approach may increase our understanding of the investment decision behaviours of Malaysian retail investors and fund managers.Practical implications This study could be used as a guide by both retail investors and fund managers when making investment decisions.Originality/value This research has included both retail investors and fund managers; it has also increased literature on investment decision and behavioural finance, particularly in the context of Malaysian investors and managers. [ABSTRACT FROM AUTHOR]

This study examines the impact of ownership structure on the debt financing of 556 Shari'ah compliant firms in Malaysia from 2000-2015. This study reveals that the nature of family-owned firms does have great influence in the debt financing decisions and being closely guided by the Shari'ah principles with the restriction imposed on the debt consumption level allowed seem to have significant effect on the debt financing of Shari'ah-compliant firms understudy as well. Fear of the dilution of controlling power over the firms for these family owned and the characteristics of Shari'ah-compliant being governed by certain Shari'ah regulation have significant influence on debt consumption in the capital structure. Certain significant determinants seem to enhance the unique nature of these firms regarding the debt financing decision. This study contributes to the literature by providing insights of the factors affecting the debt financing of family owned, Shari'ah-compliant firms in Malaysia. [ABSTRACT FROM AUTHOR]

Financial crisis that hit the economic standing in 2008 has put the blame on the mismanagement of the working capital of firms. Empirical evidences highlight the importance of efficient and sound working capital management thus managers should therefore be alert and sensitive on the factors affecting working capital management to improve firm's performance in order to stay resilient. Nevertheless, limited studies have been done on this matter and is very much pronounced in the East Asian countries, despites the fact that these countries are the worst affected by the crisis. Malaysia is no exception in suffering from the turmoil thus it is paramount to examine the influencing factors of working capital management especially before, during and after a financial crisis in Malaysia. A panel regression is employed on a financial data of 57 Malaysian listed firms from 2002-2012. The study period is divided into three different scenarios, 2002-2006 (before the crisis), 2007-2008 (during the crisis) and 2009-2012 (after crisis). The cash conversion cycle is employed as a measurement of working capital management. The independent variables and their measurements are chosen based on previous studies, which are, profitability (net profit/total asset), debt (total debt/total asset), sales growth (salest-salest-1)/salest-1), free Cash flow (free cash flow/total asset), firm size (natural logarithm of sales) and liquidity (current asset/current liabilities). Several tests are carried out and the statistical procedure showed that the Random Effect model is the best model to explain the relationship between working capital management and its explanatory variables. A constant negative relationship is spotted between profitability and firm size with working capital management for all the three periods. The negative relationship between profitability and firm size with working capital management provide strong evidence on pecking order theory. Sales growth is negatively related to working capital management before and after the crisis periods. Debt appears to be mixed, with positive sign before the crisis but negative after the crisis. Free cash flow is positively related during the crisis period. No significant relationship however is detected on liquidity. The same variables (profitability, debt, sales growth and firm size) have significant relationships with working capital management before and after the crisis. This study has policy implication where managers can be sensitive on factors affecting working capital management and give particular attention on profitability, debt, sales growth and firm size in the management of their working capital regardless of the economic scenarios. [ABSTRACT FROM AUTHOR]

Purpose - The purpose of this paper is to examine the efficiency of the Malaysian banking sector. The technique used by Oliveira and Tabak is extended by employing market data as input and output variables to individual bank stocks, which are listed on the Kuala Lumpur Stock Exchange (KLSE). By doing this, the paper aims to broaden the scope of the existing studies by employing individual bank market data to measure their efficiency levels. Design/methodology/approach- The paper utilizes the non-parametric data envelopment analysis methodology to measure the efficiency of banks which are listed on the KLSE. While previous bank efficiency studies have used balance sheet and income statements data, this paper uses individual bank's market data as the input and output variables to construct the efficiency frontier. Findings - The main conclusion of this paper is that the most efficient bank is also highly ranked in terms of returns with relatively low standard deviation and beta. The results also suggest that all the banks which have managed to appear on the efficiency frontier are mainly based on the relatively higher mean returns rather than lower standard deviations and/or beta. Research limitations/implications - The approach used in this paper could also be used to other economic sectors, as well as from a multiple countries perspective as this approach allows the comparison of different countries, which have different accounting rules and are not comparable by using standard models. The approach could also be extended to incorporate other input(s) and/or output(s) which could further add to the robustness of the results. Originality/value - The contribution of the paper consists of proposing a new approach to the measurement of bank efficiency. [ABSTRACT FROM AUTHOR]