European Journal of Economics, Finance and Administrative Sciences

Issue 84
December, 2015

The Determinants of Corporate Social Responsibility Disclosure: An Empirical Study of Jordanian Companies Listed on Amman Stock Exchange
Mahmoud Alkhalialeh

This study examined the determinants of the level of Corporate Social Responsibility (CSR) disclosures for a sample of 74 non-financial Jordanian firms listed on Amman Stock Exchange (ASE). CSR disclosure has been the focus of substantial theoretical and empirical researches in developed and developing economies. Based on prior empirical and theoretical related studies' findings, this study examined empirically the association between CSR disclosure and several firm specific variables. Seven firm's specific variables are hypothesized to be associated with the level of CSR disclosures. These include company size, environmental sensitivity, company age, earnings quality, Tobin's q, leverage and ownership structure. The study employed correlation and multiple regression analysis to test the study's predictions. Results indicate that, at least, three explanatory variables (Environmental sensitivity, Company's size and Leverage) are positively and significantly associated with CSR disclosure. In addition, the correlation results indicate that CSR disclosure is positively and significantly associated with earnings quality and company's age. However, in the multiple regression analysis the coefficients of these two variables remain in the same direction, but failed to be statistically significant at the conventional level. This result is likely to be due to the substantial correlations of these variables with company size where both variables are significantly and moderately correlated with company size.
Keywords: Corporate Social Responsibility Disclosure, Jordan.

Risk and Return in Emerging Stock Market: An Applied Study on the Amman Stock Exchange
Mahmoud F. AL Refai and Samer Abdelhadi

The study aimed to test the correlation between return and risk in Amman Stock Exchange (ASE) in order to determine the market's ability to compensate investors in the form of a riskpremium. The study used the general index of stock prices at the ASEduring the period 2/1/2008 to 31/12/2014. The study used Generalized Autoregressive Conditional Heteroscedasticity (GARCH), and found that there are positive and statistically significant relationship between return and risk in the ASE, Which means that the ASE is able to compensate investors at a riskpremium by making them more cautious to market risk.
Keywords: Stock, return, GARCH, Amman Stock Exchange

The Viability of Islamic Finance and its Impact on Global Financial Stability: Evidence from Practical Implications
Malik Shahzad Shabbir, Muhammad Saarim Ghazi and Tazeem Akhtar

This study examines the factors which influence and contribute towards the financial viability of Islamic finance and its impact on global financial stability. However, the purpose of this paper is to differentiate the practical implications of both Islamic and conventional finance on global financial stability. The Islamic finance is asset backed financing which creates wealth through trade, commerce and believes in risk and return sharing. Islamic banking is asset driven as against to conventional banking which is liability driven. In order to introduce new financial products for market, financial innovation in Islamic finance must be within the Shari’ah parameters that are tested against the ‘Maqasid al-Shari’ah’. Interest-based system leads to income and wealth inequalities and mis-allocation of resources. Moreover this system has absence of just and equitable aspect of distribution that may exploit either the debt holder or the financier. Such implications are reached to a tipping point that leaves only one choice: change or face continued decline and misery.
Keywords: viability, global financial stability, practical implications, asset driven, tipping point.

Are Islamic Financial Institutions become Challenge or Opportunity for Western Countries?
Malik Shahzad Shabbir and Amir Khalil ur Rehman

Nowadays, we hear about the resistance of Islamic finance to latest global financial crisis and about the continuous growth of Islamic financial institutions. This paper tries to look closer at the measures to be taken and changes to be made from both, the western regulatory authorities and Islamic financial institutions in order to come up with suggestions on how this problem could be solved, paving the way for the establishment and growth of Islamic finance in these countries. First, this paper addresses theglobal challenges of Islamic financial institutions are facing particularly in the western countries through theoretically analyzed. Then, in the same way opportunities are addressed and analyzed. The analysis shows that Islamic finance has indeed some internal challenges, in the form of weak corporate governance practices, lack of products for liquidity risk management, lack of standardization in the products and the relative small size of the majority of Islamic financial institutions compared to conventional institutions. On the western regulatory authorities’ side, the analysis shows that the existing regulatory framework is not compatible with Islamic financial institutions’ operations.
Keywords: Shariah, Islamic, Western, Regulatory, opportunities and challenges

Barriers for Adoption Financial Reporting Standards in Islamic Financial Institutions of Indonesia
Malik Shahzad Shabbir, Amir Khalil urRehman and Tazeem Akhtar

Indonesian Islamic financial institutions (IIFIs) are in a cross roads when it comes to financial reporting standards. As the industry is moving towards globalized economy, it is tempted to adopt the generally accepted international standards vis-à-vis Islamic compliant financial reporting standards. Thus, this paper aims to explore what are the influences towards adopting international financial reporting in Indonesia and how they impact the IIFIs. From the interactions of the actors associate with the process of standardization, the study suggests that political and economic imperialist motive exists in financial reporting standardization in Indonesia. As the IIFIs are established to demonstrate their accountability for both shareholders and society, therefore, not only their operation must uphold the mutuality concept but also their reporting mechanism.
Keywords: IFRS, Indonesian Shari’ah SFAS, Islamic financial institutions, political economy.

Does Islamic Finance IndustryManage Shariah Complaint Risk in Transactions?
Malik Shahzad Shabbir, Amir Khalil urRehman and Atta ur Rasool

There are three main platforms where Islamic transactions can be performed: in banks, insurance firms and in the capital market.Living in a globalized world, it is undeniable that globalization has aided the development of Islamic finances. However, our study focusedon Islamic finance industry through its shariah complaint risk management system in their financial transactions and at what extent they exist in practice.Whereas, Shariah compliance risks are risks that arise from the IFIs’ failure to comply with the Shariah principles. Sometimes complex products have gone through a long process of development and after a long process they are rejected by the Shariah boards for non-compliance with Shariah. The strong performance of the IFIs during the global financial crisis has grown the interest of investment community, consumers and intermediaries’ investors around the world.Due to this reason, most of western conventional banks have opened Islamic financing windows.
Keywords: Islamic transactions, shariah complaint, risk management, insurance firms and Islamic capital market

Is Greek Debt Odious? Truth Committee on Public Debt in Greek or Hellenic Parliament and Criticism on results
Spyridon Repousis

In Greece the odious debt concept received high attention during recent financial crisis and Greek or Hellenic Parliament decided to establish a Special Committee. The Greek Parliament Truth Committee on Public Debt, investigated Public Debt in Greece and main findings are: (a) increase of debt was related to the growth in interest payments, (b) high public spending in defence expenditures associated with corruption scandals, (c) falsification of public deficit and debt statistical data and illicit capital outflows, (d) adopting the Euro led to a drastic increase in private debt.
Debt to the IMF, ECB, bilateral loans and private creditors are considered illegal and odious and conditionalities associated with debt caused a humanitarian crisis. Measures imposed in Greece are considered as undemocratic, ineffective, leading to serious violations of socio-economic rights.
On the other side of results, Greece was a democratic regime during the time it contracted the vast majority of its loans and membership into the Eurozone, benefitted country by gaining the highly low interest rates that Euro currency involved. Also, substantial borrowing for Greece spent directly on the people via social welfare and public sector wages and infrastructure development.
Therefore, Greece instead of the odious debt doctrine should resort to other debt solutions such as simple debt repayment, restructuring or “haircut” of the debt (principal and interest) or declare bankruptcy without invoking the odious debt doctrine. Although this recourse avoids the dangerous precedent-setting risks of the odious debt doctrine, it also involves numerous other complexities and policy problems because with default, the banking system would collapse.
Keywords: Odious debt, Greece.
JEL Classification: H63, K00

Greece’s Forced Occupation Loan to Germany during World War II
Spyridon Repousis

Purpose - The purpose of this paper is to estimate the present value of the Loan that the Bank of Greece was forced to provide to the German Occupation Forces during 1942–1944.
Design/methodology/approach - The formula of Future Value is been used and available data about credits (loans) are as published in Report of Governor of Bank of Greece for the years 1941, 1944, 1945 and 1946 (Table IA, page 202), adjusted for inflation by Bank of Greece, Monthly Statistical Bulletin of Bank of Greece, November 1941, two months before starting the credits or loans to German authorities.
Findings - The total amount of occupation loan to Germany was 1,530,033,302,528,819 Greek Drachmas or 3,670,610 British Sovereigns. It was not only a loan but many monthly credits from January 1942 to October 1944 from Bank of Greece to German authorities. The deflated amount was finally 32,260,637,311 Greek Drachmas, at base year and month, November 1941. The average exchange rate between Greek Drachma and United States of America dollars was until April 1941, 1 dollar equal to 151.25 Drachmas. So the amount of 32,260,637,311 Greek Drachmas was equal to 213,293,470 United States of America dollars in November 1941. The exchange rate of Dollar and Euro during 4th of January 2016, was 1 Euro equal for 1.0898 Dollar which means that Occupation Loan was 8.820.191.039 Euros.
Originality/value – It is a realistic attempt to estimate the present value of Forced Occupation Loan.
Keywords: Germany, Greece, Occupation Loan

Risk Management in Supply Chains: Bibliometric Analysis
Franco Takakura, Mauro Vivaldini, Pedro Domingos Antoniolli and Valeria Rueda Elias Spers

The objective of this research was to investigate the academic production on "risk" and its relation to Supply Chain (SC), published in journals under the Scopus database, in the period from 2010 to 2015. The methodology used was the bibliometric analysis technique, aided by Vosviewer software. The sample was comprised of 1,714 items, with 1,638 articles in the US, and only 87 in Brazil. Effective management of SC seeks to add value to its processes, improving at the same time flexibility, quality, better service, and compatible costs. Such assertiveness in managing SC consists largely of collaboration and strategic cooperation among its members, as well as integration of processes, structures and systems. However, due to SC characteristics, there are potentially risks, which can have negative impacts on the service level, and consequently, SC loss of effectiveness. In this study, was observed that there is a shortage on the risk management theme in the SC to the Brazilian context, present in the available literature. It was also found that there was a predominance of publications in medical area, focused on health, besides chemical and genetic fields. The Scopus source selection was justified because it is a database that provides a macro knowledge, including scientific areas of technology, social sciences, arts and medicine.
Keywords: Supply Chain Management, Risks, Bibliometric Research, Academic Production, Scopus Database.

Forward-looking Information and Results: Evidence on Integration between Strategic Plans and Annual Reports
Francesco Avallone, Paola Ramassa and Alberto Quagli

This paper develops the concept of disclosure integration and presents an exploratory analysis on the topic looking at connections between forward-looking information (FLI) in strategic plans and historical data in annual reports, focusing on information continuity and comparability. It is based on the idea that integrating FLI with reported results is essential to allow users to interpret corporate disclosures and to have an indication of the likely reliability of future financial forecasts. In other terms, integration is reached when investors are able to verify whether the previously disclosed targets have been hit in documents covering the same topics and items with historical information.
To perform this analysis, the paper advances a proposal for an index to measure integration based on the comparison of FLI in strategic plans and in the following annual reports.
Additionally, we investigate determinants of disclosure integration. Our findings support the hypotheses that size and performance are significantly associated with the level of disclosure integration, suggesting that the degree of integration is higher in smaller and more profitable companies.
Keywords: voluntary disclosure, disclosure integration, forward-looking information, strategic plan, annual report
JEL classification: M40, M41