Putting Audit Approaches in Context: The Case of Business Risk Audits in Jordan

International Journal of Auditing
Int. J. Audit. 14: 1–24 (2010)

AUTHORS:
Modar Abdullatif
Husam Aldeen Al-Khadash


ABSTRACT:

Large international audit firms are increasingly expanding their activities around the world and  increasingly promoting the concept of a similar quality audit to be performed by all their worldwide offices and member firms. This strategy includes developing and using a similar audit approach globally. This study surveys the views of Jordanian auditors, mainly from audit firms with international affiliations, about how such an international approach, with emphasis on the currently popular business risk approach, is applied in practice by Jordanian audit firms and how appropriate and practical the application of such an international approach to auditing is in different contexts.

The results of the study show that the business risk approach has been generally adopted by the larger Jordanian audit firms to varying extents, especially those which are full members of an international audit firm network. However, audit clients in Jordan face too many business risks, especially because of poor control systems, poor corporate governance structures, and unclear or non-existent corporate strategies and objectives.

These risks have to be addressed by the business risk approach under very low audit fees. Such  factors have led to the business risk approach not being applied in the way that the large international audit firms intended, and not achieving the approach’s main objectives, leaving the audit profession with the question of how appropriate it is to adopt an international audit approach in different  contexts.

Key words: Business risk approach, international audit firms, international audit approach, audit fees, Jordan

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Size and Determinants of Capital Structure in the Greek Manufacturing Sector

Diakses melalui http://www.eap.gr/programmes/deo/deo34/docs/IRAE.pdf.

AUTHORS:
F. Voulgaris
Dimitrios Asteriou
George Agiomirgianakis

ABSTRACT:

Increasing competition in the European Union (EU) and world markets affects the Greek manufacturing sector. Capital structure is essential for the survival, growth and performance of a firm. There has been a growing interest worldwide in identifying the factors associated with debt leverage. However, nothing has been done so far in contrasting small and medium sized enterprises (SMEs) and large sized enterprises (LSEs) on these aspects. SMEs are very important in the Greek manufacturing sector for employment and growth. Empirical studies show that capital structure and the factors affecting it differentiate with firm size. In this paper we investigate the determinants of capital structure of Greek manufacturing firms and formulate some policy implications that may improve the financial performance of the sector. Our study utilizes panel data of two random samples, one for SMEs and another for LSEs. The findings show that profitability is a major determinant of capital structure for both size groups. However,

efficient assets management and assets growth are found essential for the debt structure of LSEs as opposed to efficiency of current assets, size, sales growth and high fixed assets, which were found to affect substantially the credibility of SMEs. In an era of increasing globalization, the findings imply that Greek SMEs should focus their efforts on (a) increasing their cash flow capacity through better assets management and achievement of higher exports and (b) ensuring good bank relations, but at the same time, turn to alternative forms of financing. Greek LSEs should adopt strategies that will lead to the improvement of their competitiveness and in securing new forms of financing.

Government policy measures aiming at structural changes and economic efficiency should be designed clearly depending upon its targets: SMEs need policies that will encourage  information exchange and co-operation in local and foreign markets and use of e-business, as well as, financial assistance. On the other hand, LSEs should be supported by policies aiming at new high-technology investments, entrance of new firms and foreign investments in the country, tax alleviation and increase of R&D and training expenditures. The upgrading and transparency of the Capital Market in Greece is expected to improve the capital structure of Greek  manufacturing firms.

Keywords: Capital Structure; Industry Study: Manufacturing; Dynamic Panel Data; Nonlinear Regression Analysis.

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Global Value Chains, Local Collective Action and Corporate Social Responsibility: a Review of Empirical Evidence

Business Strategy and the Environment
Bus. Strat. Env. 19, 1–13 (2010)

AUTHORS:

Peter Lund-Thomsen1
Khalid Nadvi

ABSTRACT:

A key debate in the corporate social responsibility (CSR) literature is the tension between global pressures and local responses. Developing country suppliers often grumble that CSR compliance adds costs. Yet, local collective action, articulated through industry associations, can potentially reduce costs and promote local embeddedness of CSR initiatives.

Through case study analysis, this paper considers how demands for CSR compliance prompted collective action responses in selected developing country export industries. We argue that differences in collective responses can be partially explained by how local export industries are inserted into global value chains. We distinguish between ‘highly visible’ value chains, led by internationally well known brands as lead fi rms, and relatively ‘less visible’ chains, where external CSR pressures come from a variety of sources, including less dominant lead fi rms, international/national regulatory frameworks and national media. This differentiation suggests a possible trade-off between the independence and the embeddedness of collective CSR initiatives.

Keywords: global value chains; collective action; industrial associations; industrial clusters; corporate social responsibility; developing countries

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CAN FINANCIAL RATIOS PREDICT THE MALAYSIAN STOCK RETURN?

INTEGRATION & DISSEMINATION
Vol. 2 • 2008

AUTHORS:
Lee Chin
Lee Weng Hong

INTRO:

The stock market is one of the most important sources for companies to raise money. This allows businesses to go public, or raise additional capital for expansion. The liquidity that an exchange provides affords investors the ability to quickly and easily sell securities. This is an  attractive feature of investing in stocks, compared to other less liquid investments such as real  estate. History has shown that the price of shares and other assets is an important part of the dynamics of economic activity,

and can influence or be an indicator of social mood. Rising share prices, for instance, tend to be associated with increased business investment and vice versa. Share prices also affect the wealth of households and their consumption. Therefore, central banks tend to keep an eye on the control and behavior of the stock market and, in general, on the smooth operation of financial system functions. Investors usually invest in share traded on the stock market because they want  to earn a positive return on their investment. The returns to an investment in shares trade on the stock market usually come from two main sources- capital gains and dividends. It has often been said that short term investor or speculators are in the market for capital gain and long-term

investor for dividends.

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Do Economic Factors Influence Stock Returns? A Firm and Industry Level Analysis

African Journal of Business Management Vol. 4(5), pp. 583-593, May 2010

AUTHORS:
Babar Zaheer Butt
Kashif Ur Rehman
M. Aslam Khan
Nadeem Safwan

ABSTRACT:

The objective of this study is to examine the stock returns variation to specific economic variables by applying a multi-factor model. The firms relating to banking and textile sectors were selected for this study on the basis of data availability, profitability and performance on the Karachi Stock Exchange. The data for the selected firms and economic variables obtained for the period of 10 years. GARCH model used to analyze risk and returns relationship. The tests applied on the stock returns of each firm and on the data set of the entire industry to generalize the results. The results disclose that market return is mainly accounts variation in stock returns, however the inclusion of other macroeconomic and industry related variables has added additional explanatory power in describing the stock returns variation. It is found that economic exposure is higher at industry level than firm level stock returns.

Results also indicate that stock returns of different firms behave differently in similar economic conditions that acquaint investors about the risk diversification opportunity in the stock market.

Key words: Stock returns, multifactor model, macroeconomic variables.

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