Corporate governance from the Islamic perspective: A comparative analysis with OECD principles

There is a growing concern emerged with a great profile regarding the Islamic principles of corporate governance. A major ethical component of any economic activity in Islam is to provide justice, honest and fairness and to ensure all parties their rights and dues. Islamic economy has progressed a great deal during these last two decades with impetus as an important concern in developing an Islamic corporate system. This paper is an attempt to discuss the nature, applications and comparison of Islamic principles of corporate governance (IPCG) with conventional principles of corporate governance considering special reference to Organization of Economic Co-operation and Development (OECD). After the discussion, it can be concluded that the dimension of Islamic perspectives of corporate governance has broader horizon and cannot compartmentalize the roles and responsibilities in which all actions and obligations fall under the jurisdiction of the divine law of Islam whereas, the OECD principles implements a firm with six different issue and obligations. Furthermore, this paper can provide some insight view in fettering mechanism to controlled, direct and organized economic activity from the Islamic point of view.     

Key Components for Organizing Architectural Tours in Isfahan,Iran

Architectural heritage attracts many tourists due to its aesthetic features and celebrities. Architourism as a new niche tourism strives to attract those who are interested in architectural heritage. This paper highlights the introduction of Isfahan city (Iran) as a new architourism destination. This research also has three other major purposes: (1) to identify the attractions for promoting architourism in Isfahan; (2) to investigate the key components for organizing architectural tours; and (3) to introduce architectural tour packages. Using a qualitative method clearly shows that demography, visitor/tourist interest, motivation and expertise, the time and duration of the visit, providing special tourism facilities, organizing educational and research activities and marketing are key components in organizing architectural tours. The results also illustrated that Isfahan has buildings, urban collections and historical textures that can be attractions for promoting architourism. Further analysis illustrated that Isfahan city has potential to organize architectural tours with 16 themes.     

The effect of private investments on banks' capital requirements

A simple leverage ratio restriction is not efficient because it does not discriminate between risky and safe banks. We use a structural and comprehensive model of the firm's asset growth to describe the equity buy-out portfolios' stylized facts for two types of banks. We derive a leverage ratio that depends on the level of risky investments, and balances between the spread on such investments, the cost of capital and the overall power of the supervisor to enforce the capital requirements. This method is more transparent and requires fewer parameters than other commonly used methods. We obtain an incentive-compatible constraint on banks to carry the minimal adequate amount of capital. This constraint enhances the supervisors' ability to enforce the rules ex post, and provide banks with a further incentive to reveal their risk type truthfully.     

Executive compensation and firm performance: adjustment dynamics,non‐linearity and asymmetry

The relationship between executive compensation and firm performance is a field of intense theoretical and empirical research. The purpose of this study is to gain additional insights into the nature of this relationship by examining empirically the relatively unexplored areas of its dynamics of adjustment, as well as its non‐linearity. The findings of this study show strong evidence in support of the view that (a) executive compensation is characterized by a dynamic process of adjustment, and (b) the relationship between executive compensation and firm performance is non‐linear and asymmetric. Additionally, the structure of asymmetry is found to be dependent on the measure of performance. Convexity characterizes the asymmetry of the relationship between executive compensation and market returns, while concavity distinguishes the asymmetry of the relationship between executive compensation and accounting returns. Copyright © 2008 John Wiley & Sons, Ltd.     

Government expenditure and economic growth: evidence from G7 countries

This paper examines Wagner's Law of Public Expenditure, which emphasizes economic growth as the fundamental determinant of public sector growth, using time series data drawn from the G7 industrialized countries over the sample period 1960 1993. It presents evidence on both the short- and long-run effects of growth in national income on government expenditure by resorting to recent developments in the theory of cointegrated processes. An attempt is also made in this study to examine if Wagner's Law holds between certain key components of government expenditure and income.     

Asymmetric output growth effects of government spending: Cross-sectional and panel data evidence

Using a model that accommodates asymmetric adjustments of output growth to changes in growth of government spending, the effects of aggregate and disaggregate government spending variables on output growth are examined. Both cross-section and panel regression estimations are conducted. Robustness of results to joint-endogeneity of output and government spending, alternative conditioning variables, and cointegration is investigated. Aggregate government spending appears to have positive output growth effects particularly in periods of below-trend growth in this variable. The government sector's productivity appears to be higher than non-government sector's productivity when spending growth is below-trend growth and only for non-OECD countries; no differences in sectoral productivities are detected for OECD countries. Government consumption spending has no significant output growth effects, but government investment spending has positive output growth effects particularly when its growth falls below its trend-growth; this favorable effect turns negative when government investment spending growth exceeds its trend-growth. Results are robust across alternative model specifications and estimation methods.     

Borrower attributes and the risk of default of conventional mortgages

Using a nationwide sample of 9,000 conventional mortgages, this paper examines their default based on a set of key borrower and loan characteristics. The results of a maximum likelihood failure time model show that the default risk is higher for small mortgages with a high loan-to-value ratio and for borrowers with low income and many dependents. The results also suggest that default is negatively correlated with the age of the property and the borrower's disposable income net of monthly financial obligations.     

The ethics of using Chapter XI as a management strategy

In the past decade, the use of the Chapter XI has soared to the detriment of many creditors, workers, and consumers. A good number of cases were not based on imminent insolvency, but on firms attempts to avoid litigation claims against them, to terminate labor or other contractual obligations, or to gain new financing.These filings for Chapter XI highlight the use of bank-ruptcy as a strategic option used by management in running a viable organization. This usage is even advised by some academics and management consultants.While such uses may not be illegal, this paper questions the seeming ease with which a firm may use bankruptcy to escape contractual obligations to customers, suppliers, and other stakeholders. It also questions the ethics of the academics and management consultants who recommend such usage. Finally, the paper calls for a change in the law in order to minimize the opportunity for the unethical abuse of the bankruptcy law.Dr. Mahmoud Salem is a lecturer, consultant, and executive training specialist. He is President of The Center for Organizational Synergy in Uniondale, New York. His major areas of interest are Global Strategic Management, Organizational System Transformation, Executive Integrity and Business Ethics.Ms. Opal-Dawn Martin is on the administrative staff of Science Applications International Corporation in McLean, Virginia. Her major areas of interest are International Business and Finance.     

Shocks,Structural Change,and the Patterns of Income Diversification in Burkina Faso*

Abstract: This article investigates changes in income diversification patterns for the case of Burkina Faso between 1994 and 2003. Contrary to common beliefs, our empirical analysis shows that rural households are not increasingly diversifying their income portfolios. Beyond insuring against and coping with weather shocks, diversification behaviour reflects structural change. Higher returns to agricultural activities, in particular in the cotton and livestock sectors, appear to be the root cause for less non‐agricultural diversification and some of our findings hint at better opportunities in the non‐farm sector. Yet, average returns in the non‐farm sector appear to remain relatively low and migration increasingly turns into a desperation‐led strategy. Overall, structural change seems to be biased in favour of richer households. Regarding responses to droughts, we confirm earlier findings, especially that the poorest households are hit particularly hard, being forced to sell livestock, which is often their only asset.