Haitham Nobanee

Cash Conversion Cycle and Firm’s Performance of Japanese Firms

Purpose - The purpose of this paper is to investigate the relation between a firms cash conversion cycle and its profitability. Design/methodology/approach - The relation between the firms cash conversion cycle and its profitability is examined using dynamic panel data analysis for a sample of Japanese firms for the period from 1990 to 2004. The analysis is applied at the levels of the full sample and divisions of the sample by industry and by size. Findings - A strong negative relation between the length of the firms cash conversion cycle and its profitability is found in all of the authors’ study samples except for consumer goods companies and services companies. Originality/value - Traditional focus in corporate finance was on the long-term financial decisions, particularly capital structure, dividends, and company valuation decisions. However, the recent trend in corporate finance is the focus on working capital management. Most of working capital management literature is based on the US experience. This study investigates the relation between the firms cash conversion cycle and its profitability of Japanese firms where the organizational structure is totally different from that of the US firms; most of the Japanese firms are interconnected and related through corporate groups (

Voluntary disclosure and stock market liquidity: evidence from the Jordanian capital market

The objectives of this study are to measure the level of voluntary disclosure provided in the annual reports of Jordanian companies and to examine the impact of disclosure level on the stock market liquidity using Jordanian data. To achieve the first objective, a self-constructed disclosure index consisting of 62 items was applied to the annual reports of 60 Jordanian non-financial companies listed at the Amman Stock Exchange for the year 2004. It was found that there is a considerable variation in the extent of voluntary disclosure among the companies. On average, a company disclosed 28% of the items of information included in the disclosure index. To achieve the second objective of this study, the relative bid-ask spread was used as a proxy for stock market liquidity. The results of regressing the bid-ask spread on disclosure level, after controlling for other variables, show that the higher voluntarily disclosed information provided in the Jordanian annual reports reduces the spread between the bids and asks, and thereby increases the stock market liquidity.

Current assets management of small enterprises

Purpose - – The purpose of this paper is to investigate the relationship between a firm’s net trade cycle, its size and liquidity. Design/methodology/approach - – The relation between the firm’s net trade cycle and its liquidity is examined using Generalized Method of Moment Dynamic Panel-Data System Estimation with Robust Standard Errors for a sample of 5,802 US non-financial firms listed in the New York Stock Exchange, American Stock Exchange, NASDAQ Stock Market and Over the Counter Market for the period 1990-2004 (87,030 firm-year observations). The analysis is applied at the levels of the full sample and divisions of the sample by size. Findings - – The results show negative and significant relationship between net trade cycle, as a comprehensive measure of efficiency in working capital management, and liquidity for small firms. Originality/value - – Most of the existing literature focusses on the large firm’s experience of working capital management. Small firms generally face liquidity problems and have limited access to external capital, and studies on their efficiency in working capital management are scant. Thus the present study is useful in understanding the relation between the firm’s net trade cycle and liquidity of small firms.

Price Limits and Volatility: A New Approach and Some New Empirical Evidence from the Tokyo Stock Exchange

This study aims to examine regularities of price limit hits for stocks listed in the TSE. Regularities of limit hits have not been examined before. The results show an increase of limit hits on Monday and Tuesday. These results of limit hits are consistent with the existing literature for the day-of-the-week effect of stock returns carried out on Japan. This indicates that such patterns of price limit hits are not all due to noise trading. The results also show that high limit hit occurrences are associated with high volatility and low limit hit occurrences are associated with low volatility.

Price Limit and Volatility in Taiwan Stock Exchange: Some Additional Evidence from the Extreme Value Approach

We reexamine the effects of price limits on stock volatility of Taiwan Stock Exchange using a new methodology based on the Extreme-Value technique. Consistent with the advocates of price limits, we find that stock market volatility is sharply moderated under more restrictive price limits.

Working Capital Management and Performance of Kuwait Construction Companies

The purpose of this paper is to investigate the relationship between working capital management efficiency and performance of construction companies listed in the Kuwait Stock Exchange. The relationship is examined using dynamic panel data two- steps robust system estimation for the period 2001-2013. The analysis is applied at all the levels of the full sample as well as at the divisions’ levels of the sample by crisis and non-crisis periods, and by size. The results show negative and significant relationships between net trade cycle as a comprehensive measure of the efficiency in working capital management and performance for large firms during the full sample period while the relations between net trade cycle and performance for small firms are insignificant. This indicates that large construction companies in Kuwait are more efficient in managing their working capital than the small companies

Does Credit Policy Affect Performance of Saudi Construction Companies

This paper aims to examine the relationship between the length of receivable conversion period as a measure of credit policy and operating profit margin as a measure of operational performance of construction firms listed in the Saudi stock market This relation is examined using dynamic panel data two- steps robust system estimation for the period 2004-2013. The analysis is applied at the levels of the full sample and divisions of the sample by crisis and non-crisis periods, sector, and by size. The results show negative and significant relationship between receivable conversion period as a measure of credit policy and profitability for the full sample. The result of the relationship between receivable conversion period and profitability for small firms is negative and significant. The results also show negative and significant relationship between receivable conversion period and profitability of real estate companies and negative and insignificant relation for building and construction companies

Does Price Limit Hit's Patterns Follow Stock Return Patterns?

The purpose of this study is to examine patterns of price limit hits for stocks listed on the Tokyo Stock Exchange. Explanations are provided for the empirical findings and the extent to which the price limit hit patterns are related to existing stock returns patterns. We argue that if patterns of price limits can be explained in the same way as the patterns of stock returns, this means price limit hits are not entirely due to noise trading. The Results show an increase of limit hits on Monday and Tuesday. These results of limit hits are consistent with the existing literature for the day-of-the-week effect of stock returns carried out in Japan. This indicates that such patterns of price limit hits are not all due to noise trading.

Equity Concentration, Agency Costs and Performance of Non-financial Firms Listed on the Saudi Stock Exchange (Tadawul)

This article examines the association between the equity concentration and agency costs as well as the impact of agency costs on performance of non-financial firms listed on the Saudi Stock Exchange (Tadawul). These relations are examined by using dynamic panel data and a two-step robust system estimation for the period 2010–2013. The study uses three proxy variables to measure agency costs. The results show that the equity concentration has no significant impact on agency costs, and the agency costs have no significant impact on firms’ performance. In addition, the study shows no evidence to support the agency theory in non-financial firms listed on the Saudi Stock Exchange (Tadawul). This study provides a better understanding of the association between equity concentration, agency costs and a firm’s performance.

Corporate Risk Disclosure of Islamic and Conventional Banks

This study examines the degree of the corporate risk disclosure and its impact on the banking performance using annual data of banks listed on the UAE financial markets: Abu Dhabi Stock Exchange (ADX) and Dubai Financial Market (DFM) during the period 2003-2013. The authors conduct the content analysis of the annual reports to measure the degree of the corporate risk disclosure. In addition, they use the panel data regressions to analyze the impact of the corporate risk disclosure on the performance of the banks. The results show low degree of the overall corporate risk disclosure index, strategic risk disclosure index, operational risk disclosure index, damage risk disclosure index, and risk management disclosure index for UAE listed banks. In addition, the results reveal significant differences in the overall corporate risk disclosure, strategic risk disclosure, financial risk disclosure, and risk management disclosure between conventional and Islamic banks. However, the effect of the degree of the overall corporate risk disclosure on the performance of UAE bank has been found insignificant. The findings of this paper contribute by providing a better understanding of risk disclosure practices in UAE and help the banks to optimally disclose their risk, improve the quality of their disclosure practices and to enhance the quality of their financial reports. The impact of the corporate risk disclosure on the performance of the banks has not been examined by any of the prior researches. In addition, this paper examines the potential difference between Islamic and conventional banks in their corporate risk disclosure practices.