Investigating the impact of board characteristics on money laundering

2020 ◽  
Vol 23 (4) ◽  
pp. 751-767
Author(s):  
Shaban Mohammadi ◽  
Hadi Saeidi ◽  
Nader Naghshbandi
Keyword(s):  
Money Laundering ◽  
Financial Stability ◽  
Stock Exchange ◽  
Screening Method ◽  
Financial System ◽  
Chief Executive ◽  
Statistical Population ◽  
Content Type ◽  
Board Characteristics ◽  
The Impact

Purpose The purpose of this study is to examine the effect of board characteristics on money laundering in Iranian listed companies. Design/methodology/approach This was a descriptive-correlational study, and in terms of purpose, it was an applied research. The statistical population of this study was all companies listed in Tehran Stock Exchange during the years 2012-2018. A sample of 150 companies was selected by screening method. Data analysis and hypothesis testing were performed using logistic regression and Eviews 10. Findings The results indicated that the board bonus and CEO duality (chief executive officer duality) had a significant effect on money laundering. CEO gender also had a significant effect on money laundering. Originality/value Sound management of risks related to money laundering by the board of directors is associated with stability, soundness and overall health of a country's financial system, which enables the integrity of the international financial system by meeting the Basel Committee goals, including strengthening the regulations, monitoring and improving current procedures, promoting financial stability and maintaining and enhancing a good corporate reputation; however, banks and other financial institutions are exposed to more serious risks, especially the reputation risk, operational risk, etc., if management does not play an effective role in the fight against money laundering. If management considers efficient and risk-driven policies and procedures in the fight against money laundering, then many problems and losses as well as many costs, including failure to collect receivables and to bring legal proceedings, can be prevented.

Investigating the impact of audit features on money laundering

2020 ◽  
Vol 23 (4) ◽  
pp. 913-930
Author(s):  
Shaban Mohammadi ◽  
Nader Naghshbandi ◽  
Zahra Moridahmadibezdi
Keyword(s):  
Money Laundering ◽  
Audit Quality ◽  
Screening Method ◽  
Audit Fees ◽  
Statistical Population ◽  
Content Type ◽  
Quality Audit ◽  
Auditor Tenure ◽  
Audit Fee ◽  
The Impact

Purpose The purpose of the present study is to investigate the impact of audit features, including audit quality, audit fees and auditor tenure on money laundering in Iranian stock companies. Design/methodology/approach This research is descriptive-correlational and applied in terms of purpose. To evaluate the audit features, variables including audit quality, audit fee and auditor tenure were used. The statistical population of this study includes all companies listed in Tehran Stock Exchange and the research period from 2012 to 2018. A sample of 150 companies was selected by the screening method. In this study, logistic regression and Eviews 10 software were used for data analysis and hypothesis testing. Findings The results showed that variables including audit quality, normal audit fee and auditor tenure have a significant effect on money laundering. Originality/value Observing money laundering rules and regulations for businesses involves is a critical issue. In auditing the financial statements of the business units subject to these laws, the auditor reviews their actions to obtain reasonable assurance of guaranteeing the money laundering laws, evaluates their effectiveness and gains approval of managers regarding observing laundering regulations. In this regard, the auditor is required to report definitive or suspected money-laundering cases or its certain or suspected evidence to the relevant authorities. Although the law prohibits the auditor from disclosing such matters to the client, it is not necessary. It seems that even if the auditors perform non-audit functions, they should report money laundering or suspicious operations and transactions.

The impact of board and audit committee characteristics on corporate social responsibility: evidence from the Iranian stock exchange

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shaban Mohammadi ◽  
Hadi Saeidi ◽  
Nader Naghshbandi
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Audit Committee ◽  
Stock Exchange ◽  
Screening Method ◽  
Asymmetric Distribution ◽  
Statistical Population ◽  
Content Type ◽  
Corporate Social ◽  
The Impact

PurposeThe purpose of this study is to investigate the effect of board and audit committee characteristics on corporate social responsibility (CSR) in Iranian companies listed in stock exchanges.Design/methodology/approachThis is a descriptive-correlational and an applied research. The statistical population of this research is all companies listed in Tehran Stock Exchange and the research period is from 2012 to 2018. Using screening method a sample of 150 companies was selected. Multivariate regression and the software Eviews 10 were used for data analysis and hypothesis testing.FindingsThe results indicated that board size had a significant effect on CSR; board independence had a significant effect on CSR; managerial ownership did not have a significant effect on CSR; CEO duality did not have a significant effect on CSR; audit committee size had a significant effect on CSR; audit committee independence had a significant effect on CSR; and financial expertise of audit committee members had a significant effect on CSR.Originality/valueThe present study is the first research performed on the effect of board and audit committee characteristics on CSR in Iran. The results of this study contribute to the literature on the effect of board and audit committee characteristics on CSR and provide suggestions for capital market participants. CSR helps reduce asymmetric distribution of information among the internal and external organizational entities and reduce agency problems and conflicts among different groups. Based on the results, an effective audit committee as an effective mechanism enhances the credibility of financial and non-financial reporting such as social responsibility, which means that an effective audit committee can improve the level of voluntary disclosure of information through effective oversight of the reporting process. It is also suggested that companies focus on audit committee characteristics to increase the level of CSR.

The relationship between narcissism, managerial overconfidence and comparability of financial statements of listed companies

2021 ◽  
Vol 19 (5) ◽  
pp. 681-700
Author(s):  
Mohammad Almaleki ◽  
Mahdi Salehi ◽  
Mahdi Moradi
Keyword(s):  
Stock Exchange ◽  
Chief Executive ◽  
Financial Statements ◽  
Business Environment ◽  
Multiple Regression Model ◽  
Content Type ◽  
Institutional Settings ◽  
Managerial Overconfidence ◽  
The Impact ◽  
The Relationship

Purpose This study aims to investigate the impact of managerial narcissism and overconfidence on financial statements’ comparability. In other words, this paper seeks to answer the question of whether the personality characteristics of managers may affect the level of financial statements’ quality of commercial entities or not. Design/methodology/approach The research hypotheses are tested using a sample of 896 observations taken from the Tehran Stock Exchange and 245 observations from the Iraqi Stock Exchange during 2012 and 2018 using the multiple regression model based on the combined data technique. Findings The findings show that managerial narcissism is positively and significantly associated with Iran’s financial statement comparability. In contrast, Iraqi data articulate a negative association between these two variables. This paper finds that Chief Executive Officer overconfidence and financial statements’ comparability are negatively related in both countries. Following the market variation, the different findings suggest that institutional settings such as the general managerial style, adopting international accounting standards (now IFRS) leading to the extent of auditing market globally in Iraq and suffering from international sanctions in Iran, the governing business environment may play an allocative role in preparing financial statements. Originality/value The present research is the first research conducted in two emerging markets (Iran and Iraq) examining the relationship between managers’ narcissism and overconfidence and financial statements’ comparability. Therefore, the present research in this area can significantly contribute to the development of science and knowledge.

Impacts of psychological behaviors of managers on money laundering: evidence from Iran stock exchange

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Hadi Saeidi
Keyword(s):  
Money Laundering ◽  
Stock Exchange ◽  
Economic Crime ◽  
Statistical Population ◽  
Content Type ◽  
Manager Behavior ◽  
Performance Measurement Systems ◽  
Negative Impacts ◽  
Manager Performance ◽  
Managerial Overconfidence

Purpose This study aims to investigate the impacts of the psychological behaviors of managers, including entrenchment, myopia, narcissism and overconfidence, on money laundering at Iranian companies listed on the Tehran Stock Exchange. Design/methodology/approach The present study is descriptive-correlational in terms of methodology and applied research in terms of objectives. The statistical population consisted of all companies listed on the Tehran Stock Exchange during 2013–2019. A total of 150 companies were selected as samples via screening. Logistic regression was used to analyze the data and test the hypotheses in EViews v10. Findings The findings revealed that management entrenchment, managerial myopia, managerial narcissism and managerial overconfidence have significant impacts on money laundering. Originality/value This study pioneer investigating the impacts of psychological behaviors among managers on money laundering in Iran. As an economic crime, money laundering poses an adverse impact on economic growth in countries. The continuous monitoring of manager performance and the deployment of performance measurement systems could prevent the negative impacts of manager behavior on money laundering.

scholarly journals Financial stability: does social activism matter?

2019 ◽  
Vol 28 (2) ◽  
pp. 183-214
Author(s):  
Peterson K. Ozili
Keyword(s):  
Gender Equality ◽  
Financial Institutions ◽  
Environmental Sustainability ◽  
Financial Stability ◽  
Social Protection ◽  
Social Activism ◽  
Financial System ◽  
System Stability ◽  
Content Type ◽  
The Impact

Purpose This study investigate the impact of social activism on financial system stability. Design/methodology/approach Financial stability was analysed from two complementary perspectives: bank-led financial stability and financial system stability driven by sector-wide credit supply. Social activism was analysed from three perspectives: gender equality advocacy, environmental sustainability advocacy and social protection advocacy. Findings The findings reveal that gender equality and environmental sustainability advocacy have significant positive effects for financial stability, whereas social protection advocacy has a significant negative effect for financial stability. In addition, social activism has negative effects for financial stability in the post-2008 financial crisis era. Finally, there are differential effects for country-groups, for instance, social activism strongly improves bank-led financial stability in African countries and for BLEND countries (countries that are eligible for International Development Association (IDA) borrowing based on per capita income levels and are also creditworthy for some borrowing from the International Bank of Restructuring and Development). The findings are relevant for the on-going debate about whether social inclusivity and activism has any economic value for the stability of businesses and the financial system. The findings have implications. Research limitations/implications The implication for policy-making is that the pressure on, or commitment of, financial institutions to be socially inclusive in all social matters such as gender equality, environmental sustainability and social protection does not guarantee stability in the financial system – whether bank-led financial stability or sector-wide financial stability. Therefore, regulators should ensure that financial institutions exercise careful discretion when adjusting their risk models to include all “social risk” factors amidst the recent pressure on corporations to be socially inclusive. Practical implications Another implication for business practice is that business leaders in financial institutions should identify the optimal level of social inclusivity that improves the stability of their corporations, because it would seem counterproductive if business leaders adopt full-scale social inclusion (or considerations) that subsequently make their corporations financially unstable which could lead to loss of shareholders wealth. Originality/value This study is the first attempt to investigate the impact of social activism on financial stability to determine whether greater social activism promotes stability or instability in the financial system.

Bank risk, profit efficiency and profitability in a frontier market

2020 ◽  
Vol 36 (4) ◽  
pp. 381-402
Author(s):  
King Carl Tornam Duho ◽  
Joseph Mensah Onumah ◽  
Raymond Agbesi Owodo ◽  
Emmanuel Tetteh Asare ◽  
Regina Mensah Onumah
Keyword(s):  
Financial Stability ◽  
Stock Exchange ◽  
Efficiency Score ◽  
Policy Formulation ◽  
Profit Efficiency ◽  
Content Type ◽  
Return On Equity ◽  
Insolvency Risk ◽  
Asset Turnover ◽  
The Impact

PurposeThe study examines the impact of risk on the profit efficiency and profitability of banks in Ghana.Design/methodology/approachData envelopment analysis was used to estimate profit efficiency scores and accounting ratios were used to measure profitability. The panel corrected standard error regression was used to assess the nexus using a dataset of 32 banks from 2000 to 2015.FindingsThe paper found that the Ghanaian banking industry exhibits a variable return to scale property, suggesting that average costs change with output size. Profit efficiency score for banks closer to the efficiency frontier is 61%. Credit risk is significant in enhancing profit efficiency and return on equity. Market risk is relevant in improving profit efficiency, return on asset and asset turnover. To drive profitability, bank managers have to be committed to effective liquidity risk, insolvency risk and capital risk management. Operational risk reduces shareholders' returns. The impact of size, age, stock exchange listing, cost efficiency and competition have are all been discussed extensively.Practical implicationsThe findings contribute to the knowledge on the risk-performance nexus and provide information that is valuable to academics, bankers and regulators for policy formulation. The findings are relevant to the newly established Financial Stability Council.Originality/valueThis paper appears to be among the premier attempts to examine the effect of various risk types identified in the Basel III framework on bank performance in Africa.

Audit-related attributes, regulatory reforms and timely disclosure

2017 ◽  
Vol 15 (2) ◽  
pp. 158-179 ◽  
Author(s):  
Khaled Samaha ◽  
Hichem Khlif
Keyword(s):  
Audit Committee ◽  
Stock Exchange ◽  
Emerging Market ◽  
Chief Executive ◽  
Policy Implications ◽  
Fiscal Year ◽  
Audit Report ◽  
Content Type ◽  
The Impact ◽  
Regulatory Reforms

Purpose This paper aims to examine the impact of audit-related attributes and regulatory reforms on timely disclosure as proxied by audit report lag (ARL) in an emerging market setting, namely, Egypt. Design/methodology/approach The paper used the balanced panel data of 372 firm-years observations of the most actively traded companies on the Egyptian Stock Exchange over the period from 2007 to 2010. The study measures the dependent variable of ARL as the number of days between the client’s fiscal year-end and the audit report. Findings Multivariate analysis indicates that audit committee activity (proxy for regulatory reforms) and external auditor type (proxy for audit-related attributes) contribute significantly to the reduction of ARL and increase disclosure timeliness. Furthermore, the paper found that ARL witnessed a slight decrease following the adoption of the new Egyptian Standards on Auditing (ESA). Finally, the paper’s findings show that industry types moderate the relationship between ARL and several audit-related variables and corporate governance attributes. Practical implications The results may have policy implications for both regulators and investors. For instance, policymakers in Egypt can enact new rules to reduce the Chief Executive Officer duality and establish the minimum required number of audit committee meetings to improve transparency level and, thus, increase disclosure timeliness. Besides, if future regulations aiming to increase disclosure timeliness are intended by Egyptian regulators, this paper’s findings suggest that this may have implications for the audit market because the Big Four audit firms will be more able to meet shorter audit delays. Originality/value The empirical evidence provided in this study further enhances the understanding of timely disclosure in Egypt which represents one of the leading emerging markets in the Middle East and North Africa region.

Money laundering and financial stability: does adverse publicity matter?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Bahriye Basaran-Brooks
Keyword(s):  
Money Laundering ◽  
Financial Stability ◽  
Global Financial Crisis ◽  
Banking System ◽  
Public Confidence ◽  
Content Type ◽  
Reputational Risk ◽  
The Global Financial Crisis ◽  
The Impact

Purpose Already suffering reputational damage from the global financial crisis, banks face a further loss of trust due to their poor money laundering (ML) compliance practices. As confidence-driven institutions, the loss of reputation stemming from inadequate compliance with regulations and policies labels banks as facilitators of crime and destroys public trust both in the bank itself, peer banks and the wider banking system. Considering the links between financial stability and adverse publicity about banks, this paper aims to critically examine the implications of ML-specific bank information on financial stability. Design/methodology/approach This paper adopts a content analysis and a theoretical discussion by critically evaluating the role of bank compliance information on stability with references to recent case studies. Findings This paper establishes that availability of information regarding a bank involved in or facilitating ML might pose a threat to financial stability if bank counterparties cut their ties with the bank in question and when bank stakeholders show a strong and sudden negative reaction to adverse publicity. Though recent ML scandals have not caused immediate instability, general loss of confidence associated with reputational risk have had a destabilising effect on affected banks’ capital and liquidity. Originality/value There has been surprisingly little discussion to date on the impact of publicly available bank information on financial stability and public confidence within the ML compliance framework. This paper approaches the issue of publicly available banking compliance information solely through the prism of public confidence and reputational risk and its impact on macro-stability by examining recent ML scandals.

Shadow banking's effects in the Chilean financial system

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Diana López Avilés ◽  
Paula Piñeira ◽  
Víctor Andrés Roco Cáceres ◽  
Felipe Vergara ◽  
Nicolas Araya
Keyword(s):  
Systemic Risk ◽  
Value At Risk ◽  
Financial Stability ◽  
Financial System ◽  
Conditional Value At Risk ◽  
Shadow Banking ◽  
Content Type ◽  
Relevant Effect ◽  
New Research ◽  
The Impact

PurposeThe Financial Stability Board (FSB) determined that entities classified as shadow banking are of a credit nature because they are capable of affecting the financial system through the entry and exit of capital. This study aims at measuring the impact of shadow banking in the systemic risk in Chile. A sample of 91 institutions (Run) belonging to the mutual funds was used, with a series showing a continuous behaviour between 2004 and 2018.Design/methodology/approachThe measurement is carried out using the conditional value at risk (CoVaR) methodology, which analyses the behaviour of an institution in a regular state against the same institution in a state of stress.FindingsThe results obtained reflect that liquidity mismatches do not have a relevant effect on the systemic risk, while the 2008 crisis does contribute to its decline.Originality/valueThere are less number of literature studies that apply statistical models regarding shadow banking, at least at a quantitative level, so this research is a beginning for other studies, supporting future authors in their new research as a basis.

Ownership structure, board characteristics and dividend policy: evidence from Turkey

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ajab Khan
Keyword(s):  
Ownership Structure ◽  
Dividend Policy ◽  
Critical Mass ◽  
Relevant Literature ◽  
Chief Executive ◽  
Data Set ◽  
Content Type ◽  
Board Characteristics ◽  
Female Directors ◽  
The Impact

Purpose This study aims to investigate the impact of ownership structure and board characteristics on dividend policy in the listed Turkish firms between 2013 and 2019. Design/methodology/approach This study uses the probability of paying dividends, dividend payout ratio and dividend yield measures. The suitable regression procedures (logit, probit and Tobit models) are used to examine the research hypotheses by focusing on a panel data set drawn from the Borsa Istanbul (BIST) 100 index, excluding financial and utility firms. Findings The empirical findings indicate that institutional and concentrated ownerships are significant and positively associated with dividend payouts, whereas family ownership does not influence dividend policy. On the other end, board size is positive, while chief executive officer duality is negatively related to dividend policy. Additionally, the female directors and board independence are insignificant in influencing firms to pay high dividends. Research limitations/implications Future researchers can validate this paper’s findings by considering the stock dividends as well. Additionally, future researchers may investigate the relationship between these constructs by extending the sample size of firms listed on BIST or in other emerging markets. Practical implications This study’s findings may serve policymakers, regulators, investors and academic researchers to get valuable guidance from relevant literature. The Turkish firms may improve dividend policy by implementing the regulatory framework introduced by the Capital Markets Law in 2012 for effective monitoring and protecting the minority shareholders’ rights. The controlling shareholders may alleviate principal-principal conflicts by ensuring the independence of directors and increasing the number of female directors according to the critical mass of at least 30% of board members. Originality/value This study contributes to agency theory and signaling theory by considering ownership structure and board attributes among Turkish firms related to dividend payments.

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