8-Corporate Governance Practices in Emerging Markets: The Case of GCC Countries

Literature Review

Different CG indices have been confirmed in the literature, mostly depended on developed countries. But, very small work has been carried out on the developing and developing markets. An attempts is carried out to establish know how of the emerging markets of Asia Especially established in oil based GCC countries.

A little Interesting work has been carried out by two professional bodies; Institutional Shareholder Service (ISS) and Investors responsibility Research Center (IRRC). Both, ISS and IRRC provide a large CG database which offers a complex measure to analyses the overall Quality of a firm's CG. In this area Important research i has been Done by La Porta et al. (1998), Klapper and Love (2002), Gompers Et al. (2003), De Toledo and Pillicer (2006), Brown ; Caylor (2006), Leal and Carvalhal-da-Silva (2005), Ananchotikul (2007), Garay and Gonzalez (2008), Daines et al., 2010;

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Ibrahimpasic (2012) and Hassan (2012), are among others. A preliminary work CG was conducted By La Porta et al. (1998) to estimates the limits of that develops an "anti-director rights" Index to measure the degree of shareholder safety a major Factor in CG in 49 countries around the world. The index is calculated to know the sum of six dummies that assume the value Of 1 if a given form of shareholder protection is present and 0 Otherwise.

It is concluded that common law countries have powerful investor safety than civil law countries and that stronger investor protection is related to greater ownership Dispersion. Following the same lines, Klapper and Love (2002) constructed a weighted average CGI for 374 firms in 14 emerging countries on a scale of 0–100. They conducted a firm level survey completed by Credit Lyonnais Securities Asia (CLSA) but with only six governance Components out of the seven studied by CLSA to build the index.

The factors studied are transparency, accountability, independence, management discipline, fairness and responsibility. The study indicated that countries having poor legal systems, scored higher index in terms of CG and companies intending to expand in the market with the help of external credit have more chances of growth.

To stick to better governance. Moreover, Klapper and Love that the countries listed in US stock markets shows good Governance. One more renowned and mostly used CG index; the 'G-Index' was established by Gompers et al. (2003) for 1500 large firms between 1990 and 1998. They used un-weighted index to compute CGI reprocesses IRRC data as an equally weighted sum of 24 Shareholders rights practices across five characteristics; delay, safety, voting, state and others.

The index assigns a value of 1 for every attribute that refuse shareholder rights and 0 Otherwise. Results shows that good governance has a positive Relationship with stock returns. In the same scenario, De Toledo and Pillicer (2006) established a governance chart for 97 nonfinancial Public companies in Spain by maintaining a binary Scale. Based on 25 questions and the questionnaire prepared By Brown and Caylor (2006);

Gompers et al. (2003) and Klapper and Love (2004) are considered to arrive at the CGI and Companies scoring 25 are assume to portray high governance Standards. A study by Leal and Carvalhal-da-Silva (2005) on Brazil established another milestone in index preparation related to emerging Countries. They prepared an un-weighted CGI for 131 firms listed in The Sao Paulo stock exchange from 1998 to 2002.

Title

11-Temporal Granger Causality and the Dynamics Relationship between Real Tourism Receipts, Real Income and Real Exchange Rates in Malaysia

Literature Review

This study applies the bounds testing Approach, error-correction modeling and Persistence profile to analyses the dynamic Relationship between real tourism receipts, Real income and real exchange rates in Malaysia. The study is covering sample period 1974 to 2009. Finding of this study disclosed that a long term relationship subsist in between the variables.

In short term finding are that no Granger causality between actual income and real tourism receipts, while multiple causality in the long run. In addition it has been found that unidirectional causality running from real Exchange rates to real tourism receipts and Real income in both short- and long-run. The ultimate purpose of this study is to explore the temporal Granger causality and dynamic relationship between real tourism receipts, real Income and real exchange rates in Malaysia for the period of 1974 to 2009.

Applied the bound testing approach and Granger causality Test in addition to variance decomposition, Impulse response function and Persistence profile analyses to achieve the purpose of this study. Major finding are, the bounds testing Approach indicates the existence of a long-run Relationship between real exchange rates, real tourism receipts and real Income in Malaysia. Second, to enhance the robustness of conclusion, it engages three long-run estimators, Namely ARDL, DOLS and FMOLS to Estimate the long-run elasticity's.

Real income and real exchange rates have a positive and significant effect on real tourism Receipts in Malaysia. Third, the Granger causality Test is used to investigate the direction of Causality between the variables. In the short term, there is unidirectional Granger causality running from real exchange rates to real tourism Receipts and real income, but no Granger Causality between real tourism receipts and real Income.

Therefore, in the long-run, we find bidirectional Granger causality verification in between real income and Real tourism receipts, but a Unidirectional Granger causality running from Real exchange rates to real tourism receipts and real income. Fourth, apart from using the Granger causality test, we consider variance Decomposition and impulse response function to find out the reaction of each variable either it is attributed to its own shock and to the shocks in other variables in the system.

It is also called as the variable specific Shock. In describing shocks to real tourism Receipts in Malaysia, real income is more important than real exchange rates. Meantime, real exchange rates and Real tourism receipts are equally necessary in describing shocks to Real income. The urge reply of function disclose that shocks to real income and real exchange Rates have significant positive impacts on real tourism Receipts in the short- and long-term.

Further, shock to real tourism receipts has a Positive effect on real income, while shock to real exchange rates has a negative effect on Real income in Malaysia. It is concluded that, persistence Profile showed that the real tourism receipts System is stable and valid as the profile Declines sharply towards the equilibrium within a period about three years after a system-wise shock. This affirms that the Trivariate co integrating system used in this Study is logical.

For policy-making, we could mention at least two significant policy indications from the findings of this study. First, tourism is the long-term source for economic growth in Malaysia as the Granger Causality results propose that real income and real tourism receipts have bidirectional causality.

Title

12-Corporate ownership, governance and tax avoidance

An interactive effects

Literature Review

The fact is that taxes deductions from the cash flows available to a firm, and therefore the dividends distributable to the shareholders, propose that firm owners would attempt to increase their wealth through various taxes to keep away from these Practices. Such types of advantages of enhanced cash flows from tax avoidance practices are ingenious with certain Non-tax costs. This required the costs/benefits considering of such type of practices and the choice of tax avoidance if the interest outweigh the linked costs.

Therefore, the benefits and the associated costs with corporate tax avoidance are discussed here. Prior to explanation, little awareness are provided on the meaning and measures of corporate Tax avoidance to give proper ground for the discussion in detail. The corporate tax avoidance lacks universal definition as it might connote "different thing to different People" (Hanlon ; Heitzman, 2010:137).

The reality is that there is significant tax impacts on all settlement of a Company, meant to enhance its profit, could account for such shortness of universal definition. , they have different definitions of corporate tax avoidance put up by researchers in present times (for a review of these definitions see: Salihu, Sheikh Obid ; Annuar, 2013; Salihu 2014). Here, explain corporate tax avoidance as a decrease the clear cut corporate tax liabilities.

This definition is in line with Hanlon and Heitzman (2010) It explains tax avoidance "as a continuum of tax arrangements policies where something like municipal bond Investments are at one side (lower explicit tax, perfectly legal), Therefore , the terms Such as tax management; tax planning; tax sheltering; and tax aggressiveness are exchangeable used with tax Avoidance in the literature (see for instance: Chen et al. 2010; Lanis and Richardson, 2011; 2012; Minnick ; Noga, 2010; Tang ; Firth, 2011).

Similar to its definition, there have been many ways of corporate tax avoidance used in the prior Literature. These ways are mainly depended on the estimates from the financial statements and could be categorized into three classes/groups. The first group adds those measures that examine the multitude of the gap between book and Taxable income. All these consist of total book-tax gap; residual book-tax gap and tax-effect book-tax gap.

The Second group has to take up with those establish the evaluate the proportional amount of taxes to business income. All these having effective tax rates (this comes in several variants like accounting ETR; current ETR; cash ETR; Long-run cash ETR; ETR differential; ratio of income tax expense to operating cash flow; ; ratio of cash taxes Paid to operating cash flow).

The third group comprises other measures such as optional permanent differences (PERMIDIFF)/DTAX; unrecognized tax benefits (UTB); and tax shelter estimates. Other than this plethora of measures of corporate tax avoidance used in the tax literature, its conforming aspect remains un-captured as most of the measures are computed based on items that are affected by accrual accounting Procedures.

To this part, Hanlon and Heitzman (2010) proposed a measure for conforming tax avoidance as the Proportion of cash tax paid to operating cash flow. Salihu, Sheikh Obid and Annuar (2013) documented the significant difference of this measure from other similar measures. This study suggested the use this measure for the Empirical investigation given the context of the study.

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