Template-Type: ReDIF-Article 1.0 Author-Name: Yilun Shi Title: REPUTATION, FINANCIAL PERFORMANCE, AND INDUSTRY COMPETITION Abstract: In this study, we re-examine the relationship between reputation and financial performance in a unique setting, namely industry intensity. Using a sample of Most Admired Companies by Fortune magazine from 2006–2008, we show that industry competition partially changes the dynamic between financial performance and corporate reputation. While more reputable firms generate better operating outcomes regardless of industry competition, the effect of prior financial performance on subsequent reputation is moderated as competition intensifies. Specifically, in non-competitive sectors, financial outcome is still a dominating factor in evaluating future corporate reputation. The influence, however, is diluted in competitive sectors as information asymmetry is eased. Our empirical findings advance the understanding of the relationship between reputation and performance as well as its interaction with other institutional features. Classification-JEL: G30 Keywords: Corporate Reputation, Financial Performance Journal: The International Journal of Business and Finance Research Pages: 1-16 Volume: 10 Issue: 2 Year: 2016 File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v10n2-2016/IJBFR-V10N2-2016-1.pdf File-Format: Application/pdf Handle: RePEc:ibf:ijbfre:v:10:y:2016:i:2:p:1-16 Template-Type: ReDIF-Article 1.0 Author-Name: Davide Scaltrito Title: IS VOLUNTARY DISCLOSURE VALUE RELEVANT? EVIDENCE FROM ITALIAN LISTED COMPANIES Abstract: The paper aims to assess the level of voluntary disclosure in companies listed on the Italian Stock Exchange and understand the relationship between the quality of voluntary disclosure and market value of Italian listed companies.Voluntary disclosure refers to the discretionary release of financial and non-financial information, which companies are not obliged to disclose by accounting standard setting bodies. In particular, this paper analyzes the effect that disclosure of voluntary information could have on the stock market value of Italian listed companies. To do this, 203 annual reports of Italian listed companies for the year 2012 were analyzed. A voluntary disclosure index index is created to measure the extent of disclosure. The index is used in an ordinary least squares model, as a dependent variable, to understand relationships between the above-mentioned determinants. The disclosure score is composed mainly of 38 items per firm.A total of 7,714 items were collected and analyzed.Results show the level of voluntary disclosure provided by Italian listed companies in their 2012 annual reports positively and significantly affect the value relevance of Italian listed companies. Classification-JEL: M41 Keywords: Voluntary Disclosure, Value Relevance Journal: The International Journal of Business and Finance Research Pages: 17-30 Volume: 10 Issue: 2 Year: 2016 File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v10n2-2016/IJBFR-V10N2-2016-2.pdf File-Format: Application/pdf Handle: RePEc:ibf:ijbfre:v:10:y:2016:i:2:p:17-30 Template-Type: ReDIF-Article 1.0 Author-Name: Abdus Samad Title: TECHNICAL EFFICIENCY OF ISLAMIC BANKS VERSUS DOMESTIC BANKS: EVIDENCE FROM BANGLADESH Abstract: This paper empirically estimates the technical efficiencies (TE) of Islamic banks compared to conventional banks in deposit mobilizations and loans production for 2010. This analysis uses the stochastic frontier production function. Estimates of the mean TE of Islamic banks and conventional banks for loans are 59.6 percent and 62.8 percent respectively, and for deposits are 0.61 and 0.60 respectively. Parametric tests, test, Satterthwaite-Welch t-test, Anova F-test, and Walch F-test, indicate no statistical evidence of significant differences between the TE of Islamic and conventional banks. The competitive market structure for loans and deposits markets, evidenced by the Herfindahl-Hirschman Index of less than 400, provides an explanation for the equality of mean TE between Islamic and conventional banks. Classification-JEL: G20, G21, C33 Keywords: Efficiency, Foreign Bank, Domestic Bank, Stochastic Frontier Journal: The International Journal of Business and Finance Research Pages: 31-40 Volume: 10 Issue: 2 Year: 2016 File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v10n2-2016/IJBFR-V10N2-2016-3.pdf File-Format: Application/pdf Handle: RePEc:ibf:ijbfre:v:10:y:2016:i:2:p:31-40 Template-Type: ReDIF-Article 1.0 Author-Name: Anwar Al-Gasaymeh Author-Name: John Kasem Title: LONG-RUN PURCHASING POWER PARITY AND EXCHANGE RATES: EVIDENCE FROM THE MIDDLE EAST Abstract: This paper examines the validity of Purchasing Power Parity and investigates the market integration between Jordan and its major trading partners, namely, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates. Unit root tests, Johansen co-integration test and a vector error correction model were employed to test data covering the period 2005Q1-2012Q4. The unit root tests demonstrated that all variables were integrated of order one. The results of co-integration tests showed that a co-integrating relationship existed between exchange rates, domestic and foreign price levels for four Gulf Cooperation Council countries. The two remaining countries, Oman and United Arab Emirates, do not have a cointegration relationship. For the vector error correction model, we found the error correction terms for Jordan with the Gulf Cooperation Council countries carried the expected sign. This suggests that whenever there is a deviation from the equilibrium co-integrating relationship, the exchange rate interacts in a dynamic fashion by adjusting to restore its long-run equilibrium. Finally, the models passed all the diagnostic checking. In conclusion, these results provide evidence that the Purchasing Power Parity model holds in the long run. The results also show the Jordanian economy is integrated with six trading countries. Classification-JEL: C32, F31, F37 Keywords: Purchasing Power Parity; Johansen Co-Integration; Vector Error Correction Model, Jordan and Gulf Cooperation Council Journal: The International Journal of Business and Finance Research Pages: 41-53 Volume: 10 Issue: 2 Year: 2016 File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v10n2-2016/IJBFR-V10N2-2016-4.pdf File-Format: Application/pdf Handle: RePEc:ibf:ijbfre:v:10:y:2016:i:2:p:41-53 Template-Type: ReDIF-Article 1.0 Author-Name: Muneesh Kumar Author-Name: Neetika Batra Author-Name: Florent Deisting Title: DETERMINANTS OF PRIORITY SECTOR LENDING: EVIDENCE FROM BANK LENDING PATTERNS IN INDIA Abstract: Mandatory directed credit or priority sector lending (PSL) is part of the regulatory framework for commercial banks/ financial institutions in many countries, both developing and developed. However, compliance and lending effectiveness of such programs may be determined by a host of factors. This may be particularly so in developing countries, where availability of finance for the vulnerable sectors like agriculture, small businesses, weaker sections, is scarce. The present paper aims at examining the patterns of priority sector lending by banks, with a view to identifying the factors which determine this lending, and implementation challenges for lending by banks in such programs. The paper is based on an analysis of secondary data relating to priority sector lending (1998-2014) for eighty banks in India, and is supported by findings from the survey of ninety-seven lending officers of various banks. The results indicate gaps in patterns of the sect oral target compliance by different bank groups, along with the lending preferences and challenges faced by banks in such lending. It also identifies bank-specific characteristics like the nature of ownership, size, performance, etc., which have a significant impact on the priority sector lending patterns. Based on its findings, the paper offers policy suggestions for improving the effectiveness of priority sector lending program. Classification-JEL: G21, G34, O1 Keywords: Banks, Directed Credit Program, Priority Sectors, Bank Ownership, Small Business Credit Journal: The International Journal of Business and Finance Research Pages: 55-80 Volume: 10 Issue: 2 Year: 2016 File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v10n2-2016/IJBFR-V10N2-2016-5.pdf File-Format: Application/pdf Handle: RePEc:ibf:ijbfre:v:10:y:2016:i:2:p:55-80 Template-Type: ReDIF-Article 1.0 Author-Name: Mohamad Jais Author-Name: Chandana Gunathilaka Title: ILLIQUIDITY EXPOSURE OF SIZE AND VALUE IN MALAYSIAN EQUITY RETURNS Abstract: This study examines pricing implications of size, value, illiquidity and momentum effects in Malaysian stock returns. It employs time series and panel methods in testing APT-motivated pricing models over a sample period of 14 years up to 2013. Results indicate the significance of illiquidity over size and value factors. Capital Assets Pricing Model (CAPM) poorly performs in explaining average stock returns. An asset’s exposure to size, value, momentum, and illiquidity characteristics subordinates CAPM’s explanatory power. Momentum trading strategy is profitable in short to intermediate horizons, yet momentum risk factor is unable to improve the efficiency of pricing models. Application of illiquidity adjusted Fama-French threefactor model is apparently persuasive for investments and related decisions in Malaysia. Classification-JEL: G10, G12 Keywords: Illiquidity, Pricing, Risk Factors, Malaysia Journal: The International Journal of Business and Finance Research Pages: 81-90 Volume: 10 Issue: 2 Year: 2016 File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v10n2-2016/IJBFR-V10N2-2016-6.pdf File-Format: Application/pdf Handle: RePEc:ibf:ijbfre:v:10:y:2016:i:2:p:81-90 Template-Type: ReDIF-Article 1.0 Author-Name: Hsiang-Tsai Chiang Author-Name: Shu-Lin Lin Author-Name: Li-Jen He Author-Name: Yi-Ting Sung Title: PROFESSIONAL EDUCATION BACKGROUND AND EARNINGS MANAGEMENT OF CHAIRMEN AND SENIOR MANAGERS Abstract: In this study, we investigated how chairmen of the board (COBs) and senior managers, who have professional education background, implement earnings management based on their professional knowledge. The empirical results showed that, regardless of whether COBs are concurrently holding positions as chief executive officers (CEOs), varying degrees of earnings management were exercised as they applied their professional education background and adopted discretionary accruals (DAs) or manipulating operating cash flows. Because DAs demonstrate self-reverse effect as accounting principles, they should be used cautiously and conservatively to manage earnings. COBs and senior managers are individuals who manage earnings. When COBs have accounting background and concurrently hold CEO positions, they exhibit the highest degree of earnings management. Directors and external investors must pay additional attention when COBs concurrently serve as CEOs, because this enables them to manipulate the financial statements of companies based on their professional knowledge. Classification-JEL: M1, M14 Keywords: Earnings Management, Discretionary Accrual (DA), Real Earnings Management (REM), Professional Education Background Journal: The International Journal of Business and Finance Research Pages: 91-108 Volume: 10 Issue: 2 Year: 2016 File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v10n2-2016/IJBFR-V10N2-2016-7.pdf File-Format: Application/pdf Handle: RePEc:ibf:ijbfre:v:10:y:2016:i:2:p:91-108