Finance and Financial Management Commons^™

Ownership Structure And Corporate Performance : A Study On Malaysian Public-Listed Companies, Yoke Ping Lua

Student Works (2000-2009)

This study examines the relationship between ownership structure and corporation performance on 100 Malaysian public-listed companies from 1993 to 1997. We first investigate the effect of ownership concentration on corporate performance, as measured by return on equity, market to book value ratio and return on assets. Further, we extend our analysis by examining the relation between insider ownership and the three accounting ratios. The results showed no significant relationship between ownership concentration or insider ownership and corporate performance for the selected corporations in 1993 - 1997. This study further confirms the studies conducted by Kwabena (1993) and Yee (1998) that …

The Selective Capital And Exchange Controls In Malaysia : A Malaysian Perspective, Muhamad Shukri Abdul Rani

Student Works (2000-2009)

The latest financial and currency crisis that struck Malaysia in 1997 has exposed several macroeconomic weaknesses within the Malaysian economy, in light of the huge influx of international capital flows and speculative activities, and highlighted once again the issue of premature capital account and financial liberalization. These weaknesses such as economic growth well above potential output, loss of efficiency in the economy, current account deficits, over dependence on the banking sector for loans, which were later used for unproductive investments such as those in the stock and property markets have made Malaysia vulnerable to the shocks that emanated from the …

Afghanistan's Economic Potentials And Malaysian Entrepreneurs' Perceptions, Abdul Sattar Murad

Student Works (2000-2009)

Afghanistan is a country that has started its economic development after the World War II, one of the very early beginners in launching its economic development programs; it is one of the least developed countries in Asia. This study reviews the economic potentials of Afghanistan including mineral, water, land resources and perception of Malaysian Investors. These two aspects of the study highlight the causes of low economic development and factors responsible for it. This study attempts to examine four logically linked questions, i.e. (i) what are the trade potentials of Afghanistan? (ii) What are the mineral potentials of Afghanistan? What …

Banking Crisis In Malaysia : Causes, Recovery Measures Taken And Their Effectiveness, See Yan Chan

Student Works (2000-2009)

This research project discusses the causes, recovery measures taken and the effectiveness of the measures to the Malaysian banking crisis in mid 1997. There are combination of factors that contributed to the crisis. Among the factors are excessive credit growth, over-exposure of lending to broad property sector and stock market, weaknesses in the banking system and external shock-currency attack. In addition, tight monetary policy which was designed to rescue the currency attack further aggravated the banking problem. Later in September 1998, Government further response by reverting the above tight monetary policy and gradually easing the monetary policy. Besides that, four …

Corporate Governance In Selected Public Listed Companies In Malaysia, Sue Lin Lim

Student Works (2000-2009)

During economic boom periods, most shareholders and company regulators paid little attention to good corporate governance, hence the reason for weak corporate governance. This study investigates whether weak corporate governance has significant effects on the corporate performance, investment and financing patterns of selected public listed companies in Malaysia. Previous researches done by Xu and Wang (1997) and Saldana (1999) seem to show that there is a close link between these variables. Based on the regression model formulated in this study, a relationship between weak corporate governance with respect to corporate performance, investment and financing patterns have been established. From the …

A Comparative Study Of The Performance Of Commercial Banks, Finance Companies And Merchant Banks In Malaysia, 1990-1998, Kim Teck Yeap

Student Works (2000-2009)

Banking institutions play a substantial role, especially in a developing country like Malaysia, in mobilizing savings and channeling these resources for economic development. The growth of the banking institutions over the past two decades was achieved through the rapid build-up of an extensive branch network, the widening of banking services and the acceleration of credit activities. The focus of this paper is to evaluate the relative performance of banking institutions in Malaysia during the 1990-1998 period, using the CAMEL rating framework. The banking institutions included in this study are the major groups of banking institutions operating in Malaysia, namely commercial …

An Evaluation On Project Financing Under Islamic Banking, Sugunadevi Arjunan

Student Works (2000-2009)

Although Islamic banking has been in operation fo r more than a decade in Malaysia, it's market share and growth seem to be quite limited and fa ll far short of earlier projection. This study attempts to investigate one type of Islamic banking product, that is project financing. The objectives of the study are to assess the current level of Islamic project financing and its associated growth, to identify problems faced in the implementation of Islamic project financing under the Mudharabah and Musyarakah concepts and to demonstrate with a real life case study the costs of financing under Islamic banking …

Impact Of Corporate Performance And Financial Policies On Shareholder Value In Malaysia, Kuan Hua Quah

Student Works (2000-2009)

This study examines the relationships between firms' shareholder value levels and its corporate performance, financial policies and growth opportunities. A five-year period was used ranging from 1995 to 1999. and involved a total of 106 companies that are listed in the Kuala Lumpur Stock Exchange (KLSE). In attempting to increase knowledge regarding shareholder value issues in Malaysia, a better understanding about the various financial variables that affect shareholder value of companies in Malaysia is expected. Findings show that firms with higher growth opportunities tend to have higher shareholder value levels. The results are more mixed with regard to a company's …

Mergers And Acquistions : A Study On The Performance Of Non-Financial Companies In Malaysia, Maran Marimuthu

Student Works (2000-2009)

This study examines the performance of non-financial companies that were involved in merger and acquisition activities between 1990 and 1995. A sample of 60 non-financial companies has been selected which are then split into two main groups; low sales growth companies and high sales growth companies. The objectives of the study are; to examine those companies' performance over the period 1996-1998, to compare their performance with respect to pre-crisis and crisis periods and to assess shareholder value appreciation in comparison between the low sales growth companies and high sales growth companies during their post-acquisition period. Capital gains are used to …

Performance Of Unit Trusts In Malaysia In The Period Of 1995 To 1999, Khing Wee Ong

Student Works (2000-2009)

Malaysia has experienced one of the Vv'Orst economic and financial crises in the history, in the second half of 1997. Many people are aware on how the crisis affected the share market, but not many know about the effects to the unit trusts industry. This research provides an insight on how the unit trusts in Malaysia have performed during the financial crisis. To make comparisons, the period of the research has been divided into two sub-periods, the first one being prior to the financial crisis (March-95 to June-97) and the second or.e being during the financial crisis (July-97 to November-99). …

Performance Comparison Between Bank Islam Malaysia Berhad (Bimb) And Conventional Banks, 1989-1999, Chiu Sian Nee Alison

Student Works (2000-2009)

This is an empirical study which compares the performance of Bank Islam Malaysia Berhad (BIMB) with seven commercial banks for the period 1989-1999 in terms of growth, profitability, liquidity, solvency, credit risk, earnings risk and sectoral contribution to the economy. BIMB's performance during the period of the financial crisis 1997-1999 is also compared with fifteen commercial banks. Ratio analysis is used in these comparisons. This report is divided into five chapters. Chapter 1 discusses the fundamental principles and mode of operations of both conventional and Islamic banks. Chapter 2 reviews the literature pertaining to the performance of Islamic banks in …

Nonperforming Loans In Banking And Financial Sector, Ning Ning Chang

Student Works (2000-2009)

It is crucially important to understand the connection between banking sector fragility and the nonperforning loans (NPLs) problem. The problem of mounting NPLs gained much prominence during the recession that hit particularly all countries over the world in 1980s. It is again become prominent following the financial crisis that recently hit the Asian countries. This study examines various factors contributing to the NPL problem, where some endogenous as well as exogenous factors are identified. Poor management and poor lending policies, fraud and embezzlement, moral hazard incentives, heavy government intervention and weaknesses in prudential regulation and supervision are among the factors …

The Impact Of The Travel Account On The Malaysian Balance Of Payments, Goh Mei Lee

Student Works (2000-2009)

The current account deficits in the balance of payments have been a serious concern to policy makers and academicians in their efforts to formulate possible ways to assist the current account deficits . This study looks at the Malaysian services account balances in the current account of the balance of payment with specific focus on the travel account position. The long-standing deficits in the Malaysian current account position due to the services account deficits have been rather prominent in the ear1y I980's due to excessive external debts . The net investment payment ranked the highest in terms of generating outflows …

The Impact Of The Real Exchange Rates On Exports : The Malaysian Case, Lay Lian Chuah

Student Works (2000-2009)

Many studies have yielded contradicting results on the impact of real exchange rate volatility on exports. Therefore, this paper attempts to examine the relationship between real exchange rate volatility and Malaysian exports. The model of this study is adapted from Caballero and Corbo's ( 1989) paper. In this respect, this paper also uses the same standard calculation for real exchange rate (RER) volatility. However, a minor adaptation was made whereby the standard deviation, the measurement of real exchange rate volatility is refined by using trade weighted settlement in its computation. This would be a more accurate way of measurement, as …

The Effectiveness Of Monetary Policy In Malaysia In The Light Of Financial Liberalization, Farizah Ahmad

Student Works (2000-2009)

Financial liberalization had caused instability in the money demand function as well as in the velocity of money. As a result, money supply is no longer reliable as the main intermediate target and there appeared to be a shift in the technique of monetary control towards greater reliance on interest rates as the main operating instrument. Developing countries that continue to emphasize on quantitative method in their monetary framework while at the same time implement financial refom1s may face the problem of a loss of monetary control and hence, monetary policy may possibly not be effective in influencing income or …

The Impact Of The Recent Currency Crisis On Malaysian Exports, Deivanai Kaliappan

Student Works (2000-2009)

Since the outbreak of East and Southeast Asian financial crisis, a lot has been said and done to explain currency crisis that started with floatation of Thai baht. Economists and policymakers from all over the world gathered to discuss the causes of the main agenda in global economic as well as the action to be taken in bringing the affected countries in the East and Southeast Asian region back to recovery path. However, it is already 17 months since the crisis erupted, still there is no well defined measures that can be adopted by the ailing economies to improve their …

Is The Term Premium A Risk Premium?, Louis H. Ederington, Jeremy C. Goh

Research Collection Lee Kong Chian School Of Business

This paper explores whether excess holding period returns on long vis-a-vis short-term securities behave in a manner that is consistent with (1) market efficiency, (2) the time-varying-term-premium variant of the expectations hypothesis, and (3) theories of the term premium that view it as a reward for risk bearing. Both traditional and modern theories of the term premium imply that it should evolve fairly slowly over time as attitudes toward risk and/or perceived covariances with wealth or consumption change. This implies that this period's term premium should have some predictive ability for next period's. However, we find that this quarter's ex-post …

Just Say 'No', Mark S. Beasley, Joseph V. Carcello, Dana R. Hermanson

Faculty Articles

The article discusses the prevention of financial fraud within corporations and businesses in the United States. The types of individuals named in the U.S. Securities and Exchange Commission (SEC) files are examined. Different fraud techniques are looked at, including sham sales, the recording of conditional sales, and unauthorized shipments. The author discusses the status of firms after fraud disclosure and the implications it has for finance professionals.

A Study Note On The Actuarial Evaluation Of Premium Liabilities, Claudette Cantin, Philippe Trahan

Journal of Actuarial Practice (1993–2006)

Several approaches have been used to estimate premium liabilities. The emphasis of these approaches has been on unearned premium and deferred policy acquisition expenses (DPAE), as such items represent the largest components of premium liabilities. The purpose of this paper is to provide a framework for the evaluation of premium liabilities and to augment the actuarial literature. We define and review the individual components of premium liabilities as well as the regulatory requirements and Canadian Institute of Actuaries recommendations and standards of practices related to premium liabilities. We also present an actuarial approach for estimating equity in the unearned premium, …

Commissioners Annuity Reserve Valuation Method (Carvm), Keith P. Sharp

Journal of Actuarial Practice (1993–2006)

This paper describes the commissioners annuity reserve valuation method (CARVM) and highlights the fundamental contrast with insurance valuation. Numerical examples illustrate methods of applying CARVM to particular annuity designs. The application of NAIC Actuarial Guideline 13 on bailouts is given particular attention.

Credibility Calculations Using Analysis Of Variance Computer Routines, Dennis H. Tolley, Michael D. Nielsen, Robert Bachler

Journal of Actuarial Practice (1993–2006)

In this paper we present a method of calculating Buhlmann-Straub credibility factors using standard statistical techniques developed for the analysis of variance. Emphasis is placed on using readily available statistical packages such as SAS and SPSS. Additionally many other computational tools such as EXCEL can be programmed to make such calculations. An example and some sample SAS programs are provided.

Determination Of Optimal Premiums As A Constrained Optimization Problem, Farrokh Guiahi

Journal of Actuarial Practice (1993–2006)

A simple stochastic model of an insurer's underwriting and related investment operations is used to determine the optimal amounts of written premiums for one period for the insurer's book of business. The written premium for each class is determined by the solution of a constrained optimization problem. The insurer's objective function is the expected profit on a book of business over the period. The insurer has a safety constraint where a certain portion of capital and surplus can be depleted with a small probability. This paper provides an explicit solution for optimum expected profit and corresponding written premiums by classes. …

A Fuzzy Approach To Grouping By Policyholder Age In General Insurance, Richard J. Verrall, Yakoub H. Yakoubov

Journal of Actuarial Practice (1993–2006)

In general insurance, policyholder age is often treated as a factor with the number of levels requiring that the individual ages of the policyholders be grouped. Although the groups are usually defined by the existing underwriting structure, it should be investigated as part of any premium rating exercise that uses a model to assess past claims experience. It is possible that an incorrect grouping by policyholder age could bias the results of the risk premium estimation. On the other hand, it may not be computationally feasible to use separate ages in the premium model, making some form of grouping necessary. …

Multilife Premium Calculation With Dependent Future Lifetimes, Michel Denuit, Anne Cornet

Journal of Actuarial Practice (1993–2006)

Actuaries traditionally have calculated multi-life (joint life) premiums by assuming the independence of the future lifetimes of insured persons. Recent studies, however, demonstrate dependence of the future lifetimes of couples (such as husbands and wives). This dependence materially affects the values of multi-life annuities and insurances. Using the Frechet-Hoeffding bounds and Norberg's Markov model, we determine the effect of this dependence in lifetimes on the actuarial present values of a widow's pension benefit.

Recognizing Actuarial Assumptions, Victoria Stachowski, Alice Underwood

Journal of Actuarial Practice (1993–2006)

As assumptions underlie every aspect of actuarial calculations, actuaries must be aware of the assumptions they are using and understand their importance and the possible effects of changing assumptions on the results of their calculations. This paper explores the nature of assumptions in: (i) mathematical models, (ii) data selection, (iii) actuarial methods, and (iv) the business environment. We examine reasons for making assumptions such as convenience, tradition, indications in the data, or lack of data. In addition, we discuss (i) how actuaries can judge whether these reasons are sufficient; (ii) methods that can help actuaries quantify the impact of their …

Carvm And Naic Actuarial Guidelines 33 & 34, Keith P. Sharp

Journal of Actuarial Practice (1993–2006)

Annuity valuation under the NAIC Standard Valuation Law is determined according to methods different from those methods used for life insurance. The CARVM assumption of efficient policyholder selection is clarified under NAIC Actuarial Guidelines 33 and 34 to allow for non-elective (e.g., death) benefits. In particular, Actuarial Guideline 34 is oriented toward variable annuities and prescribes methods to be used in the presence of a minimum guaranteed death benefit. In this paper these methods are examined and illustrated with examples.

Journal Of Actuarial Practice, Volume 7, Nos. 1 And 2, 1999, Colin Ramsay , Editor

Journal of Actuarial Practice (1993–2006)

ARTICLES

A Study Note on the Actuarial Evaluation of Premium Liabilities • Claudette Cantin and Philippe Trahan (First Prize)

Recognizing Actuarial Assumptions • Victoria Stachowski and Alice Underwood (Second Prize)

Commissioners Annuity Reserve Valuation Method (CARVM) • Keith P. Sharp (Third Prize)

CARVM and NAIC Actuarial Guidelines 33 & 34 • Keith P. Sharp

Multilife Premium Calculation with Dependent Future Lifetimes • Michel Denuit and Anne Cornet

A Fuzzy Approach to Grouping by Policyholder Age In General Insurance • Richard J. Verrall and Yakoub H. Yakoubov

Determination of Optimal Premiums as a Constrained Optimization Problem • Farrokh Guiahi

Credibility Calculations …

Bond Rating Agencies And Stock Analysts: Who Knows What When?, Louis H. Ederington, Jeremy C. Goh

Research Collection Lee Kong Chian School Of Business

Both bond ratings agencies and stock analysts evaluate publicly traded companies and communicate their opinions to investors. Comparing the timelines of each, it is found that Granger causality flows both ways. While most bond downgrades are preceded by declines in actual and forecasting earnings, both actual earnings and forecasts of future earnings tend to fall following downgrades. Although part of this post-downgrade forecast revision can be attributed to negative news regarding actual earnings, most appears to be reaction to the downgrade itself. Little change is found in actual earnings following upgrades. Analysts, however, tend to increase their forecasts of future …

Cost Of Capital In The Indian Context, Mahesh Santhanam

IIMB Management Review

The major problem faced while calculating the cost of capital in a developing country like India is the extreme volatility and illiquidity of the financial markets. Drawing upon various theories and empirical evidence specific to the Indian context, Mahesh Santhanam guides managers and finance professionals who analyse and evaluate capital budgeting projects that involve consideration of the cost of capital.

Market Reaction To Seasoned Equity Offerings: The Relevance Of Leverage, Growth Opportunities, And Corporate Structure, Mojib U. Ahmed

Theses and Dissertations in Business Administration

Empirical work on the market's reaction to seasoned equity offerings has rarely considered the impact of the issuing firm's leverage level or its corporate structure. This work is an attempt to include these parameters in order to better understand the market's reaction to such issue announcements.

The current finance literature recognizes the fact that leverage plays an important role in assessing the value of the firm. Leverage has both negative and positive impacts on the value of a firm (McConnell and Servaes, 1995), and thus, has both negative and positive impacts on the market's reaction to seasoned equity offerings. This …