scholarly journals Do Ownership Ties Increase the Optimistic Bias of Analysts’ Earnings Estimates? Evidence from Corporate Financing in the Korean Market

2020 ◽  
Vol 12 (11) ◽  
pp. 4657
Author(s):  
Chune Young Chung ◽  
Euisup Lee ◽  
Chang-Gyun Park
Keyword(s):  
Earnings Management ◽  
Debt Financing ◽  
Optimistic Bias ◽  
Business Relationship ◽  
Equity Financing ◽  
Corporate Financing ◽  
Need Support ◽  
Korean Market

Previous studies argue that analysts provide optimistic estimates for corporations with which their brokerage houses have a business relationship. In this study, we investigate whether brokers with ownership ties issue optimistic estimates when their affiliates need support, as when raising debt or issuing equity. We find that Chaebol-owned brokerage houses provide optimistic earnings estimates for their affiliates relative to those provided by other brokers, especially before debt financing. However, we do not observe this relationship in the case of equity financing. These results imply that analysts with ties to corporations expect earnings management to occur around seasoned equity financing and, thus, consider the risks to their reputations. Finally, our results show that brokerage houses with ownership ties are not significantly more accurate than other brokerage houses are.

scholarly journals CONTRACTUAL TERMS IN MUSHARAKAH AND MUDARABAH RESTRICTING THE PROFIT SHARE OF A PARTNER OR FACILITATING LATER AMENDMENTS TO THE AGREED RATIO: A SCRUTINY

2013 ◽  
Vol 21 (1) ◽  
Author(s):  
Muhammad Abdurrahman Sadique
Keyword(s):  
Profit Sharing ◽  
Debt Financing ◽  
The Other ◽  
Islamic Banks ◽  
Business Relationship ◽  
Equity Financing ◽  
Equity Structure ◽  
Central Pillar ◽  
Lending Institutions ◽  
Profit Share

Equity participation in joint ventures as envisaged in Shari‘ah consists of a business relationship based on mutual sharing of gains and liability. Such partnerships as prevalent in every sphere of commerce generally involve the possibility of unlimited gains for each partner in theory, without limitations attached to the amount of return to any single partner. A central pillar of the equity structure in Shari‘ah is the unbridled operation of the profit sharing ratio. Restriction of its application to a stipulated level of profits, thereby enabling a partner to claim unlimited profits while the profit share of the other is restricted to a maximum ceiling cannot be regarded to be consistent with the theory of equity participation. While such measures could realise some temporary benefit to Islamic banks, with continued practice, they could become deep-rooted in the concept of equity financing itself, thus making it operate subservient to debt financing norms. Islamic banks should attempt to alienate their identity from being lending institutions, a pioneer step towards which would be to implement a dynamic profit and loss sharing mechanism.

scholarly journals Testing the pecking order theory of capital structure: the case of Islamic financing modes

2020 ◽  
Vol 6 (1) ◽  
Author(s):  
Moncef Guizani
Keyword(s):  
Capital Structure ◽  
Random Effect ◽  
Order Theory ◽  
Equity Financing ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Corporate Financing ◽  
Financing Decisions ◽  
Executive Managers ◽  
The Capital Structure

AbstractThe purpose of this paper is to examine whether or not the basic premises according to the pecking order theory provide an explanation for the capital structure mix of firms operating under Islamic principles. Pooled OLS and random effect regressions were performed to test the pecking order theory applying data from a sample of 66 Islamic firms listed on Kingdom of Saudi Arabia stock market over the period 2006–2016. The results show that sale-based instruments (Murabahah, Ijara) track the financial deficit quite closely followed by equity financing and as the last alternative to finance deficit, Islamic firms issue Sukuk. In the crisis period, these firms seem more reliant on equity, then on sale-based instrument and on Sukuk as last option. The study findings also indicate that the cumulative financing deficit does not wipe out the effects of conventional variables, although it is empirically significant. This provides no support for the pecking order theory attempted by Saudi Islamic firms. This research highlights the capital structure choice of firms operating under Islamic principles. It explores the implication of the relevant Islamic principles on corporate financing preferences. It can serve firm executive managers in their financing decisions to add value to the companies.

scholarly journals The Effect Of Short-Term Debt On Accrual Based Earnings Management And Real Earnings Management

2016 ◽  
Vol 32 (4) ◽  
pp. 1287-1300
Author(s):  
Sun-young Park
Keyword(s):  
Earnings Management ◽  
Financial Institutions ◽  
Liquidity Risk ◽  
Discretionary Accruals ◽  
Debt Financing ◽  
Real Earnings Management ◽  
Financing Constraints ◽  
Total Current ◽  
Short Term ◽  
Management Method

This study investigates whether short-term debt is related to earnings management. Short-term debt is divided into total current liabilities, debt in current liabilities and short-term borrowings. In addition, this study examines how short-term debt is related to how firms manage their earnings. I use discretionary accruals and real operating decisions as the earnings management method. The study finds that debt in current liabilities only has a statistically significant impact on accrual earnings management, and short-term borrowings are only shown to have a statistically significant impact on real earnings management. These results indicate that managers engage in accrual earnings management of debt included in current liabilities and use real earnings management of short-term borrowings from financial institutions.Therefore, this evidence indicates that managers engage in accrual earnings management of debt in included current liabilities when they face the liquidity risk of short-term debt, and the firms with debt financing constraints are likely to manage real earnings in spite of enhanced firm monitoring by lenders such as financial institutions. The findings in this study may have implications in the debate about the monitoring function of financial institutions such as banks.

Part II Key Risks and Disputes Associated with International Mining Projects, 8 Financing Disputes

2017 ◽  
Author(s):  
Burnett Henry G ◽  
Bret Louis-Alexis
Keyword(s):  
Debt Financing ◽  
Viable Alternative ◽  
Project Finance ◽  
Equity Financing ◽  
Mining Companies ◽  
The Past ◽  
Debt Markets ◽  
Mining Projects

This chapter discusses the three main types of financing for mining projects and their respective potential for international disputes. These main forms of financing are: equity financing, debt financing, and alternative forms of financing such as royalty financing and stream financing. Equity financing is the most widespread form of financing. It is particularly popular with junior mining companies that do not have the possibility to tap debt markets. Debt financing is often used by mid-tier and major mining companies seeking to develop new projects or expand their operations. Amongst the different forms of debt financing available to mining companies, project finance is the most widely-used for international mining projects. Alternative forms of financing (including royalty financing and stream financing) have emerged over the past thirty years as a viable alternative to equity and debt.

scholarly journals Is Earnings Quality Associated with Corporate Social Responsibility? Evidence from the Korean Market

2019 ◽  
Vol 11 (15) ◽  
pp. 4116 ◽  
Author(s):  
Yoon ◽  
Kim ◽  
Lee
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Large Family ◽  
Discretionary Accruals ◽  
Sample Analysis ◽  
Socially Responsible ◽  
Weak Support ◽  
Environmentally Sensitive ◽  
Korean Market

Socially responsible firms are believed to behave in a responsible manner to restrict earnings management and thus deliver more reliable and transparent financial information to investors. We test this hypothesis by predicting a higher quality of financial reporting for socially responsible firms in the Korean market. The entire sample analysis provides evidence for the hypothesis in the use of discretionary accruals as proxy variables for the quality of financial reporting. However, our sub-sample analysis indicates that such weak support is driven by a group of environmentally sensitive firms and the affiliates of large family-owned conglomerates, or chaebol. Socially responsible firms are less likely to be involved with earnings management in the group of non-environmentally sensitive industries and non-chaebol affiliates. These firms provide a better quality of financial reporting in terms of both the use of discretionary accruals and real activity manipulations. In line with recent studies, our findings suggest that ethical concerns in producing high-quality financial reports rely significantly on firm characteristics.

scholarly journals PERBANKAN SYARIAH DAN PERBANKAN BERDASARKAN BUNGA: MANAKAH YANG LEBIH OPTIMAL?

2007 ◽  
Vol 9 (2) ◽  
pp. 57-97 ◽  
Author(s):  
Tarsidin Tarsidin ◽  
Perry Warjiyo
Keyword(s):  
Revenue Sharing ◽  
Profit Sharing ◽  
Shareholder Wealth ◽  
Debt Financing ◽  
Islamic Banking ◽  
Optimization Approach ◽  
Islamic Banks ◽  
Equity Financing ◽  
Static Optimization ◽  
Conventional Bank

Unlike the conventional interest-base bank, the Islamic banks use both equity financing with profit sharing and debt-like financing with mark-up, ad at the funding side they use both investment scheme with revenue sharing and deposit scheme with rewards. The conventional bank use debt financing with interest and at the funding side use the deposit scheme with interest as well. The optimality of the two banking systems will be tested to determine which one is more optimal in terms of the wealth of the bank shareholder, the welfare of the entrepreneur, and the welfare of the depositors.Using a multiperiod static optimization approach, the results shows that in the interest-based banking is more optimal in terms of the shareholder wealth and the depositor’s welfare, while the Islamic banking is more optimal in terms of the entrepreneur welfare.Keywords : sistem perbankan, bank syariah, bunga, bagi hasil, mudharabah, wadi'ahJEL Classification : G21, P51

scholarly journals Role of Business Age, Scale & Risk in Debt Financing Choices for the Pakistani Textile & Apparel Industry

e-Finanse ◽  
2020 ◽  
Vol 16 (3) ◽  
pp. 119-136
Author(s):  
Zahid Bashir ◽  
Muhammad Usman Arshad ◽  
Muhammad Asif ◽  
Muhammad Abbas ◽  
Hasnain Ali
Keyword(s):  
Debt Financing ◽  
Future Research ◽  
Debt Ratio ◽  
Equity Financing ◽  
Tax Shield ◽  
Total Debt ◽  
Textile And Apparel ◽  
Financing Choice

Abstract The motivation for this research enquiry is to identify the role of the business age, size and risk for the choice of debt financing in the textile and apparel sector of Pakistan along with other controlled factors. The textile and apparel sector of Pakistan comprises 464 listed entities as the targeted population while the study randomly finalized 60 firms as the sample after carefully analyzing the required information from the financial statements during the annual revenue streams of 2013-2019. The predicted variable for this research enquiry is measured by short, long and total-debt ratios while the predictor variables include the business age, firm’s scale and risk. In addition, the research includes tax shield, tangibility, liquidity, profitability, and growth as the controlling factors. The study estimated that the choice of total-debt ratio is strongly affected by business age, size and risk along-with tax shield, tangibility, liquidity and profitability while the choice of short-term debt ratio mainly depends upon the firm’s scale and age along with the tax shield. In addition, the choice of long-term debt ratio is strongly explained by the firm’s scale and age along with the tax shield, liquidity and profitability. The estimated evidence provides management with the implications for the textile and apparel sector of Pakistan to consider as significant factors in deciding the debt financing choice of this sector. The estimated evidence of this research enquiry applies to the non-financial textile sector only and cannot be generalized to the financial sector. Future research may enhance the financing choice towards the inclusion of equity financing with the same set of variables.

scholarly journals Pengaruh Debt Financing dan Equity Financing Terhadap Profit Expense Ratio Perbankan Umum Syariah Periode 2011-2015

2017 ◽  
Vol 4 (6) ◽  
pp. 505
Author(s):  
Amanda Maulidiyah Firdaus ◽  
Ari Prasetyo
Keyword(s):  
Regression Analysis ◽  
Research Method ◽  
Debt Financing ◽  
Quantitative Approach ◽  
Islamic Banking ◽  
Panel Regression ◽  
Islamic Banks ◽  
Equity Financing ◽  
Purposive Sampling ◽  
Expense Ratio

The purpose of this research is to find out the influence of debt financing and equity financing to profit expense ratio. This research is to describe the efficiency of financing in Islamic bank. The research method of this research is the quantitative approach. Character sample used is a quarterly report on three Islamic banks, Bank Muamalat Indonesia, Bank Syariah Mandiri, and BRI Syariah, period of January 2011-December 2015, so the totaling 60 samples. Sampling using purposive sampling. The analysis used the Panel regression analysis. The results showed that the partial debt financing significantly influence the profit expense ratio, and equity financing is also significantly influence the profit expense ratio. Simultaneously, debt financing and equity financing significantly influence of Islamic banking profit expense ratio.

scholarly journals Debt Financing Plan and Earnings Management

2013 ◽  
Vol null (49) ◽  
pp. 291-310
Author(s):  
이장건 ◽  
허봉구
Keyword(s):  
Earnings Management ◽  
Debt Financing
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