Author :Muiz Abu Alia, Islam Abduljawad, Ahmad Haj Ibrahim, Amneh Attout, and Tasnim Damra
Discipline :Finance

The Effect of Corporate Governance on the Cost of Capital of the Companies Listed on Palestine ExchangeFinancial resources are scarce; hence they should be selected and allocated optimally. Companies should compare the cost of financing resources and the return on investments to obtain efficiency. Corporate governance may influence the risks experienced by the companies and thus the risk premium required by financing providers, thereby influencing the cost of capital. This study seeks to examine the effect of corporate governance practices of Palestinian companies on the cost of capital. Data were collected manually from annual reports. Governance was measured by a set of selected indicators according to the extant literature and the requirements of the Code of Corporate Governance in Palestine. These indicators include board independence, the board size, gender diversity, an audit committee, CEO duality, board ownership, and ownership concentration, whereas the dependent variable was measured by the weighted average cost of capital. Finally, a multiple linear regression panel was used for the estimation and validation of the hypothesis. The study includes 44 companies listed on the Palestine Exchange, that represent all its sectors. The financial statements of those companies were used to obtain data covering the period from 2015 to 2019. The stock prices and indices were obtained from the Palestine Exchange. The interest rates were obtained from the Palestinian Monetary Authority. The total number of observations was 220. The results of a multiple linear regression panel indicate, on the one hand, that companies with high ownership concentration, board ownership, gender diversity, and CEO duality have lower costs of capital. On the other hand, the board's independence, the board size, and the audit committee were insignificant factors affecting the cost of capital. These results are consistent with the stewardship theory and resource dependence theory. The adoption of governance patterns relevant to the identification and allocation of financial resources may minimize the cost of capital. Although there are so many studies that dealt with governance, a piece of evidence on the relationship between governance and the cost of capital can hardly be found and is limited to developed countries. Taking into account the different interpretations and practices of governance across countries, the generalizability of the results of these studies is questionable. This study provides new evidence from the Palestine Exchange on the relationship between governance practices and the cost of capital. The results of this study are related to the small and unique economy of Palestine and may be generalized only to similar economies. The results would guide management in the reduction of the cost of capital for Palestinian companies by shedding light on the governance factors that have affected this cost. Identification of these factors would have a positive impact on the harsh economic conditions of the business environment that Palestine suffers from because of the strict restrictions imposed by the occupation. Accordingly, the study calls upon companies and regulators to strengthen governance practices, particularly the increase of the presence of females on boards of directors and the stimulation of audit committees.

Author : Mahmoud Elsawy
Discipline :Organizational Behavior

Psychological Entitlement as a Moderator Variable in the Relationship between Organizational Identification and Withdrawal Behavior: An Application on University Hospitals in the Arab Republic of EgyptThis study aims to examine psychological entitlement as a mediator variable in the relationship between organizational identification and withdrawal behavior. The descriptive analytical approach is used. It includes studying the problem and describing it accurately, expressing it qualitatively, and clarifying its characteristics, as it is represented in a quantitative manner and in terms of the degree of its relationship. The study is conducted on university hospital employees; the study sample is 400, and the correct and accepted responses are 319. The response rate is 79%. The results reflect the fact that both organizational identification and psychological entitlement significantly affect withdrawal behavior. They also reveal that psychological entitlement is a moderator variable in the relationship between organizational identification and withdrawal behavior. The study is one of the first studies to examine psychological entitlement as a moderator variable in the relationship between organizational identification and withdrawal behavior. The study is limited to those employees working at university hospitals.

Author :Jafar Othman Elsharif Abdul Aziz
Discipline :Accounting

Compliance with Requirements of International Financial Reporting Standard for Small and Medium-sized Entities Approved in the Kingdom of Saudi Arabia: An Exploratory StudyThe purpose of this study is to reveal the extent of commitment to apply the requirements of the International Financial Reporting Standard to small and medium-sized entities approved in the Kingdom of Saudi Arabia and to reveal the statistically significant differences between the opinions of study sample members due to the two variables, i.e., years of experience and the job title regarding the extent of commitment to applying standard requirements. A questionnaire consisting of a set of statements was implemented to measure the study variables. This study was conducted on a stratified random sample. The field study was conducted on a random accessible sample of 356 individuals of financial managers, accountants, and internal auditors working in small and medium-sized entities that apply the standard, and a sample of legal auditors in Riyadh. The study indicates that there is a commitment to apply the requirements of the International Financial Reporting Standard to small and medium-sized entities approved in the Kingdom of Saudi Arabia. However, the application of requirements was uneven, as it was high in the field of accounting recognition and measurement, whereas it was moderate in the presentation of the financial statements and the application of accounting disclosure requirements in the financial statements. This is one of the first studies that dealt with the extent of compliance with the requirements of the International Financial Reporting Standard for small and medium-sized entities approved in the Kingdom of Saudi Arabia. The current study is limited to the financial managers, accountants, and internal auditors working in small and medium-sized entities, and the legal auditors in Riyadh.

Author :Mohammad A. Alfaraj and Mejbel Th. Al- saidi
Discipline :Public Administration

Corporate Social Responsibility (CSR) Disclosure of Islamic and Conventional Banks in KuwaitThis study examines the corporate social responsibility (CSR) disclosure practices in Islamic and conventional banks. A content analysis was conducted on secondary data to compare the quality and quantity of CSR disclosure among banks listed on Boursa Kuwait. Data for this study were drawn from the annual reports of ten banks (five Islamic and five conventional banks) for 2015. CSR information was classified into four categories: human resources, products and services, community involvement, and environmental issues. Findings from the descriptive results show that conventional banks provide higher quality and a greater quantity of CSR information than Islamic banks do regarding human resources and products and service CSR information, whereas Islamic banks deliver higher quality and a greater quantity of CSR information related to community involvement and environmental issues. Despite that, the statistical results reveal that the differences in CSR disclosure between both bank types are not significant. The study provides insights and adds to the literature regarding the quality and quantity of CSR disclosure of banks in a developing country by focusing on the banking sector, which is an important sector in Kuwait’s economy. And finally, the study is valuable for regulators to improve the quality and quantity of CSR information disclosed by all sectors. The study focuses only on the CSR disclosure of a limited sample of Kuwait banks in 2016. Also, the research was limited to annual reports; however, there are other sources of CSR information. Third, only one year of the banks’ annual reports was used.

Author :Nawaf Alabduljader and Sulaiman T. Al-Abduljader
Discipline :Finance

Determinants of SME Funding: The Case of KuwaitThe aim of this study is to explore the determinants of small and medium enterprises funding terms, and more specifically what factors at the individual and firm level influence demand for credit, funding obstacles, and access to credit. The study uses questionnaires to define the characteristics of the founders and the firms and how they influence their funding terms. The sample includes 172 small and medium enterprises in Kuwait in 2019. It includes 55 female owners (32%), and 117 male owners (68%). 75% of SME owners are under the age of 35. In terms of the SME-level characteristics, 62% of the ventures employ a full-time accountant, 67% pay more than 10,000KWD as start-up capital, 57% of SMEs have more than 10 full-time employees, 80% are revenue-generating SMEs, 64% have done a feasibility study prior to starting their company. 37% of the SMEs in this sample have been established for more than five years. Female entrepreneurs do not face more obstacles in funding than male entrepreneurs do and are not less likely to get access to credit; this would indicate no gender discrimination. Female entrepreneurs do less demand for capital. A founder’s education has to do with access to capital, such that entrepreneurs with higher education are more likely to access capital than those with lower education. Larger firms are more likely to access credit than smaller firms. This study is the first to examine the factors that influence SME funding terms in the Kuwaiti market, it also examines the two levels of analysis to identify what individual (entrepreneur) level factors influence funding terms and what firm (SME) level factors influence funding terms in Kuwait. The results of the study suggest that there is no gender discrimination regarding access to capital for SME owners. Nonetheless, female entrepreneurs are less likely to demand credit, which may require some interventions to encourage females to obtain credit and grow their businesses. Bigger firms have easier access to capital, while newer and smaller businesses continue to face significant obstacles and challenges in accessing funding. Overall, the results of the study suggest that it is important to develop more specialized funding instruments to serve newer and younger businesses.