More rigour in rating ESG products will aid investment

2021 ◽  
Keyword(s):  
Audit Process ◽  
Content Type ◽  
Rating Agencies ◽  
Industry Standards ◽  
Bond Funds ◽  
Bank For International Settlements

Significance Ratings providers have been tightening their methodologies and scoring of ESG funds but there is no universal methodology for categorising firms or funds as sustainable, or for monitoring their sustainability. Impacts Investors will run the risk of investing in funds that are rated ‘sustainable’ but actually invest in firms with non-sustainable practises. ESG rating is likely to become part of the annual audit process in many jurisdictions but differences in methodology will persist. Questions of impartiality will persist as the accountants and rating agencies tend to be paid by the institutions they are assessing. Green bond issuance will surge; the Bank for International Settlements runs two green bond funds and will help to set industry standards.

Duration model for maturity gap risk management in Islamic banks

2020 ◽  
Vol 15 (3) ◽  
pp. 1167-1186
Author(s):  
Syed Alamdar Ali Shah ◽  
Raditya Sukmana ◽  
Bayu Arie Fianto
Keyword(s):  
Risk Management ◽  
Banking Sector ◽  
Islamic Banks ◽  
Management Mechanism ◽  
Content Type ◽  
Customer Base ◽  
Industry Standards ◽  
Bank For International Settlements ◽  
Gap Risk ◽  
Conventional Banks

Purpose The purpose of this paper is to propose models of duration for maturity gap risk management in Islamic banks. Design/methodology/approach A thorough review of literature on duration modeling, duration measurement in Islamic banks and Shariah compliance has been conducted to set parameters to develop Shariah-compliant maturity gap risk management mechanism. Findings Models based on durations of earning assets and return bearing liabilities using various rates of return earned and paid, benchmark rates and industry standards commonly used by Islamic and conventional banks. Practical implications Increased Shariah compliance has threefold impact. Firstly, it will increase trust of customers. Secondly, it will help improve profitability by reducing non-Shariah compliance penalties from the regulators. And finally, it will enhance market capitalization and returns stability to investors because of enhanced customer base, increased level of trust and increased profitability. Originality/value This research proposes Shariah-compliant maturity gap risk management models based on the concept of duration according to recommendations of Bank for International Settlements. As there is no such maturity gap risk management mechanism that meets the requirements of Shariah using benchmarks that are common between Islamic and conventional banks; therefore, this research presents risk management solutions that can be applied simultaneously in the entire banking sector.

Constructing the ideal SRI (sustainability reporting index) framework for Indonesian market: combined perspectives from rating agencies, academics, and practitioners

2019 ◽  
Vol 15 (5) ◽  
pp. 573-596 ◽  
Author(s):  
Sita deliyana Firmialy ◽  
Yunieta Anny Nainggolan
Keyword(s):  
Factor Analysis ◽  
Content Analysis ◽  
Exploratory Factor Analysis ◽  
Social Performance ◽  
Sustainability Reporting ◽  
Analysis Method ◽  
Content Type ◽  
Rating Agencies ◽  
Social Environmental ◽  
Social Rating

Purpose This study aims to focus on developing the sustainability reporting index (SRI) with combined perspectives from varied social rating agencies, along with integrated combined perspectives from academics experts and Indonesian companies. Design/methodology/approach The first section discusses the theoretical framework along with the sustainability challenges faced by companies in Indonesia. The second section develops the methodology of the study to measure the SRI by considering practical and theoretical perspectives, starting from the identification of initial disclosure, selecting the final disclosure and developing the hierarchical framework. Lastly, the third section confirms the validity of the study’s framework by the exploratory factor analysis method and its comparability by comparing the content analysis result of the study with the Kinder–Lydenberg–Domini (KLD) method. The content analysis was used to analyze annual reports, sustainability reports and companies’ websites based on indicators found in the resulted model. Findings The main finding is the SRI framework (SRIF) of the study, which is built on the basis of the stakeholder relationship theory and is focused on three main dimensions (social, economic and environmental). Specifically, the framework consists of 17 indicators and 93 sub-indicators. On the basis of factor analysis method, it can be safely said that the study’s SRIF is quite valid. The high score of correlations between the SRIF and KLD results at the composite and dimension levels, along with the statistically significant results show that the study’s SRIF results and KLD results are fairly similar. Research limitations/implications The present study has its limitation as it only gathers data from publicly available reports issued by the firms (secondary data). Owing to time limitation, primary data are not collected. However, this is also the strength of this research as it will allow investors to replicate the study’s methodology to measure companies’ sustainability. Practical implications The study is useful to organizations and statutory bodies toward finding a replicable method to measure the Indonesian companies’ social performance. In addition, the study also introduced the usefulness of the qualitative program Atlas TI to perform content analysis, the exploratory factor analysis method to ensure validity and comparability by comparing it to the KLD methodology, which is known globally as the most widely accepted methodology to measures social performance. Lastly, this study will provide implications to the Government to ascertain the level of SRI reporting among the Indonesian public-listed companies. Originality/value The resulted framework in this study simultaneously considers social, environmental and economic factors in the context of companies in Indonesia, while previous researchers have constructed reporting index separately (i.e. Sumiani et al., 2007; Zhao et al., 2012). Especially in the context of Indonesia, there is no such index simultaneously focused on the three main dimensions, namely, social, environmental and economics. The current study tries to fill the gap by using the constructed SRI index based on three perspectives combined, namely, social rating agencies, academic theorist and Indonesian companies.

Identifying the determinants of Malaysian corporate Sukuk rating

2018 ◽  
Vol 11 (3) ◽  
pp. 432-448 ◽  
Author(s):  
Nur Amirah Borhan ◽  
Noryati Ahmad
Keyword(s):  
Information Asymmetry ◽  
Multinomial Logistic Regression ◽  
Small Sample Size ◽  
Small Sample ◽  
Third Party ◽  
Significant Variable ◽  
Content Type ◽  
Rating Agencies ◽  
High Level ◽  
Rating Category

Purpose This study aims to identify the determinants of Malaysian corporate Sukuk rating and attempts to find out which determinant has the most significant impact. Design/methodology/approach The framework tries to establish a relationship between firm’s size, profitability, Sukuk guarantee status and types of Sukuk with Sukuk rating from the perspective of Agency Theory and Information Asymmetry Theory. The data consist of 43 Sukuk issuances from 2006 to 2015. Multinomial Logistic Regression Model is then used to find out the significant determinants of Sukuk rating. Findings The study found that only three variables significantly impact Sukuk rating. The results show that a guaranteed Sukuk Ijarah or a guaranteed Sukuk Musyarakah that is issued by a highly profitable firm has a higher likelihood of getting rating AAA or rating AA as compared to getting rating A. A type of Sukuk, particularly Sukuk Murabahah, is the most significant variable influencing Sukuk rating. However, firm size is not a significant determinant of Sukuk rating in the context of this study. Research limitations implications The first limitation of the study is the relatively small sample size. Second, the study only tested four independent variables. Practical implications Several implications are derived from the results of the study. First, new firms that are planning to issue Sukuk should consistently maintain a high level of profit and consider issuing debt-based Sukuk to ensure that the issued Sukuk have higher rating. To increase the likelihood of getting higher rating, they should also consider providing a third-party guarantor. As for existing Sukuk issuers that are in lower rating category, they should increase their profitability to be upgraded to higher rating category. Second, risk-adverse investors should invest in highly profitable, guaranteed and debt-based Sukuk, as these Sukuk are likely to be in higher rating category and provide guarantee in terms of capital payments during liquidation or bankruptcy. Third, to reduce information asymmetry, policymakers should make it compulsory for all Sukuk issuers to have their Sukuk rated annually and make it mandatory for all rating agencies in Malaysia to publish their Sukuk rating methodologies. Originality/value This paper helps to expand the limited existing literature about the determinants of Sukuk rating, particularly for the Malaysian corporate Sukuk.

South African government faces public-sector showdown

2021 ◽  
Keyword(s):  
Public Sector ◽  
South African ◽  
African Government ◽  
Wage Bill ◽  
Content Type ◽  
Rating Agencies ◽  
The Public ◽  
Debt Burden ◽  
Political Position ◽  
The Face

Significance The negotiations follow the government’s refusal last year to pay the final annual tranche of a previous three-year deal. Containing the public-sector wage bill is seen as key for President Cyril Ramaphosa’s administration to rein in a spiralling debt burden. Impacts The three main rating agencies may postpone their next assessments until the wage talks gain greater clarity. Government firmness in the face of union demands could undermine Ramaphosa’s hold on the ruling ANC. With unions in a weak political position, they may have to stomach government intransigence due to lack of alternatives to Ramaphosa. Substantial concessions to unions would be divisive amid difficult budgetary choices such as below-inflation increases on social grants.

A comparative study of economic growth as a key determinant of sovereign credit ratings in Africa

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Misheck Mutize ◽  
McBride Peter Nkhalamba
Keyword(s):  
Economic Growth ◽  
Credit Rating ◽  
Credit Ratings ◽  
Credit Rating Agencies ◽  
African Union ◽  
African Countries ◽  
Content Type ◽  
Rating Agencies ◽  
Sovereign Credit ◽  
Sovereign Credit Ratings

PurposeThis study is a comparative analysis of the magnitude of economic growth as a key determinant of long-term foreign currency sovereign credit ratings in 30 countries in Africa, Europe, Asia and Latin America from 2010 to 2018.Design/methodology/approachThe analysis applies the fixed effects (FE) and random effects (RE) panel least squares (PLS) models.FindingsThe authors find that the magnitude economic coefficients are marginally small for African countries compared to other developing countries in Asia, Europe and Latin America. Results of the probit and logit binary estimation models show positive coefficients for economic growth sub-factors for non-African countries (developing and developed) compared to negative coefficients for African countries.Practical implicationsThese findings mean that, an increase in economic growth in Africa does not significantly increase the likelihood that sovereign credit ratings will be upgraded. This implies that there is lack of uniformity in the application of the economic growth determinant despite the claims of a consistent framework by rating agencies. Thus, macroeconomic factors are relatively less important in determining country's risk profile in Africa than in other developing and developed countries.Originality/valueFirst, studies that investigate the accuracy of sovereign credit rating indicators and risk factors in Africa are rare. This study is a key literature at the time when the majority of African countries are exploring the window of sovereign bonds as an alternative funding model to the traditional concessionary borrowings from multilateral institutions. On the other hand, the persistent poor rating is driving the cost of sovereign bonds to unreasonably high levels, invariably threatening their hopes of diversifying funding options. Second, there is criticism that the rating assessments of the credit rating agencies are biased in favour of developed countries and there is a gap in literature on studies that explore the whether the credit rating agencies are biased against African countries. This paper thus explores the rationale behind the African Union Decision Assembly/AU/Dec.631 (XXVIII) adopted by the 28th Ordinary Session of the African Union held in Addis Ababa, Ethiopia in January 2017 (African Union, 2017), directing its specialized governance agency, the African Peer Review Mechanism (APRM), to provide support to its Member States in the field of international credit rating agencies. The Assembly of African Heads of State and Government highlight that African countries are facing the challenges of credit downgrades despite an average positive economic growth. Lastly, the paper makes contribution to the argument that the majority of African countries are unfairly rated by international credit rating agencies, raising a discussion of the possibility of establishing a Pan-African credit rating institution.

Barriers to integrating building information modelling (BIM) and lean construction practices on construction mega-projects: a Delphi study

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Martin Evans ◽  
Peter Farrell
Keyword(s):  
Delphi Study ◽  
Statistical Tests ◽  
Lean Construction ◽  
Building Information Modelling ◽  
Content Type ◽  
Information Modelling ◽  
Industry Standards ◽  
Building Information ◽  
Research Findings ◽  
The Government

PurposeThe construction industry encounters substantial challenges in its evolution towards sustainable development and in the adoption of building information modelling (BIM) technology and lean construction (LC) practices on construction mega-projects. This research aims to investigate the critical barriers encountered by key construction stakeholders in their efforts to integrate BIM and LC in the construction mega-projects.Design/methodology/approachA two-round Delphi survey shaped the foundation of aggregating consensus between an expert panel that examined a set of 28 barriers resulting from a detailed analysis of the extant literature. Descriptive and inferential statistical tests were exploited for data analysis, and interrater agreement analysis was used to elaborated and validate results.FindingsThe research concluded that the key barriers by descending order of significance are lack of mandatory BIM and LC industry standards and regulations by the government, resistance of the industry to change from traditional practices to LeanBIM, high cost of software licenses and training and running of BIM.Originality/valueThe research findings and the proposed mitigation strategy will enhance the application of BIM and LC practices in construction mega-projects and allow project key stakeholders to place emphasis on tackling the crucial challenges and barriers identified in this research.

scholarly journals The effect of company characteristics and auditor characteristics to audit report lag

2019 ◽  
Vol 4 (1) ◽  
pp. 129-144 ◽  
Author(s):  
Muhammad Rifqi Abdillah ◽  
Agus Widodo Mardijuwono ◽  
Habiburrochman Habiburrochman
Keyword(s):  
Audit Committee ◽  
Linear Regression Method ◽  
Manufacturing Companies ◽  
Audit Report ◽  
Audit Process ◽  
Industry Specialization ◽  
Content Type ◽  
Financial Condition ◽  
Auditor Characteristics ◽  
Auditor Reputation

Purpose The purpose of this paper is to examine and analyze the factors that affect an auditor’s efficiency in completing the audit process proxied by audit report lag. The factors used in this study are selected by looking at the characteristics of the company and the characteristics of an auditor. Design/methodology/approach Company characteristics were proxied by the audit committee effectiveness, financial condition, accounting complexity and profitability, whereas auditor characteristics were proxied with auditor reputation, audit tenure and auditors industry specialization. Populations of this study were all manufacturing companies listed in Indonesian Stock Exchange in 2014–2016. Based on the purposive sampling method, the number of samples obtained from 231 companies was 77. Multiple linear regression method was used to analyze this study. Hypothesis testing was done by statistical t-test (partial). Findings The results showed that partially variables of the audit committee effectiveness and profitability had a significant negative effect on audit report lag while the variable financial condition had a significant positive effect on audit report lag. Meanwhile, variables of the accounting complexity, auditor reputation, audit tenure and auditors’ industry specialization did not show significant influence on audit report lag. Originality/value This study tests both company’s and auditor’s characteristic on audit report lag that as far as authors know never been tested simultaneously.

Chat reference: evaluating customer service and IL instruction

2019 ◽  
Vol 47 (2) ◽  
pp. 134-150 ◽  
Author(s):  
Julie Hunter ◽  
Samantha Kannegiser ◽  
Jessica Kiebler ◽  
Dina Meky
Keyword(s):  
Best Practices ◽  
Customer Service ◽  
Information Literacy ◽  
Literacy Instruction ◽  
Academic Community ◽  
Literacy Skills ◽  
Content Type ◽  
Information Literacy Instruction ◽  
Chat Reference ◽  
Industry Standards

Purpose Reflecting on the new ACRL Framework, a deficiency was observed in literature on the assessment of information literacy instruction in chat reference. An evaluation of recent chat transactions was undertaken and the purpose of the study was twofold. The purpose of this study is to discover if and how librarians were teaching information literacy skills in chat reference transactions and identify best practices to develop training and resources. Design/methodology/approach To start, a literature review was performed to identify current industry standards. A rubric, influenced by the ACRL Framework, was developed to evaluate chat transactions from one semester. Results from the assessment were compiled and interpreted to determine current practices. Findings This study identified the necessity of balancing customer service and instruction to manage student expectations and encourage successful chats. Best practices and strategies that librarians can use to provide a well-rounded service were culled for the development of training and resources. Originality/value Reference assumes a large portion of the services that academic librarians provide to students. As technology advances, librarians are relying on virtual platforms, including chat reference, as convenient and useful tools to provide reference services to the academic community. While face-to-face reference encourages information literacy instruction, it is challenging to perform the same instruction in a virtual setting where expectations are based on retail models. With the growing use of virtual services, evaluating the success of chat reference based on industry standards is imperative.

Audit committee expertise in large European firms

2020 ◽  
Vol 35 (9) ◽  
pp. 1313-1341
Author(s):  
César Zarza Herranz ◽  
Felix Lopez-Iturriaga ◽  
Nuria Reguera-Alvarado
Keyword(s):  
Audit Committee ◽  
Design Methodology ◽  
Current Knowledge ◽  
Committee Member ◽  
Audit Fees ◽  
Continuous Variable ◽  
Full Time ◽  
Audit Process ◽  
Content Type ◽  
Auditor Rotation

Purpose This paper aims to study how audit committee member expertise is related to certain features of the committee and to the audit process. Design/methodology/approach Based on information from 2,477 directors from 296 firms in eight European countries between 2005 and 2014, this study measures average audit committee expertise using a continuous variable, which combines education-based and experience-based expertise. Different measures of the audit process are then regressed against this and other control variables. Findings Average committee expertise has increased in recent years. Education-based and experience-based expertise seem to be complementary. Results also show that committees with greater expertise meet more frequently, have fewer directors with full-time dedication and pay lower audit fees. There is no link to changes in the external firm audit, which may be due to mandatory auditor rotation. Originality/value The paper provides a comprehensive metric of audit committee expertise that includes directors’ academic background, professional experience and qualifications. In addition, this study expands current knowledge concerning whether and how committee expertise affects the audit process.

US financial sector may be sound, but not safe

2015 ◽  
Keyword(s):  
Renewable Energy ◽  
Productivity Growth ◽  
Fossil Fuels ◽  
Financial Sector ◽  
Energy Sector ◽  
Too Big To Fail ◽  
Carbon Pricing ◽  
Content Type ◽  
Bank For International Settlements ◽  
Oil Gas

Subject The implications of a large US financial sector. Significance The largest US banks have posted strong first-quarter earnings amid attacks by Senator Elizabeth Warren, who has presented programmes to scale back the size and influence of too-big-to-fail (TBTF) banks. However, a recent Bank for International Settlements (BIS) paper argues that the growth of large financial sectors stymies wider productivity, growth and innovation. This case could motivate policymakers of both parties to take a renewed look at the industry. Impacts Consolidation in the financial sector may be leaving the industry vulnerable to future shocks. The energy sector could be the next bubble, as renewable energy and carbon pricing could drive oil, gas and coal companies into bankruptcy. This would imperil the 6 trillion dollars of global investment into fossil fuels since 2007.

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