Roszaini Haniffa

This paper reviews the literature on inverse normal transformations (INTs), focusing on four primary methods used in regression analysis. We examine the statistical context, derivation, and classification of INTs, as well as their applications in business and management. By reflecting on key studies that have shaped the development of these methods, we evaluate whether the choice of INT significantly affects inferential accuracy, particularly when sample sizes are small. We conclude by proposing standardised transformation parameters that bridge theoretical advances and practical decision-making.

This paper explores the influence of military directors in protecting shareholders’ wealth through CEO compensation and corporate dividend payout policies. Based on manually collected data on corporate boards of non-financial companies operating in Pakistan, the results indicate a significant negative association between the presence of military directors on corporate boards and CEO compensation, thus supporting the notion that such directors are effective in monitoring and curtailing excessive rent seeking behaviour by the agents. In other words, presence of military directors on Pakistani corporate boards reduces agency costs and in turn enhances shareholders’ wealth. Results also indicate significant positive relationship between presence of military directors on boards and dividend payout, hence signifying that such directors are effective in enhancing shareholders’ wealth by reducing free cash flow opportunities that would otherwise be deployed by agents for their private benefits. We further found military directors with business education and wider networks to have significant positive association with dividend payout but not the case with CEO compensation. We control for board attributes, agent heterogeneity and firm-specific attributes in all our models. Overall, the benefits of military directors’ inclusion on corporate boards in Pakistan have far broader strategic, economic and policy implications on the nation besides resolving the principal-agent problems in the boardroom.

Tribute to Mr Juma Bananuka (1982–2022) - Author: Roszaini Haniffa, Mohammad Hudaib

This paper explores the role of social capital in contributing to the success of a new breed of organizations known as ‘blank check companies’ or special purpose acquisition companies (SPACs) that are set up solely to target and acquire listed companies as a fast-track route to gain listing status in the stock market. The paper is a case study of Pershing Square Holdings Ltd., St. Peter Port, UK (PSH), which launched SPAC IPOs (Initial Public Offerings), Pershing Square Tontine Holdings Ltd., New York, NY, USA (PSTH), which succeeded in raising the largest capital from influential investors in 2020. Social capital theory is employed to provide theoretical structure for the analysis. Using annual reports, publicly available information on the internet, as well as social media platforms related to the company and its strategy, the authors critically analyse and highlight how the Tontine’s founder and his team utilized their structural, relational, and cognitive social capital to attract investors and gained recognition as the most successful SPAC IPO in the market in 2020. The authors found the ability to structure a SPAC IPO that departs from a typical SPAC, and the choice of timing to enter the SPAC market resulted in an over subscription and higher market valuation ratings of its IPO, as well as allowed the sponsor to be selective of its investors. This is the first study to address the significance of social capital at the individual and organizational level in creating value for SPAC IPOs. Potential investors can gain understanding and insights on the mechanics of SPAC IPOs and the importance of the founder’s social capital in ensuring successful investment. Successful SPAC IPOs will create interest in the marketplace and enhance the value of investment for investors and helped private companies to get listed faster.

Purpose: The purpose of this paper is to empirically examine the effect of intangible resources, i.e. intellectual capital (IC) on financial performance of 64 Islamic financial institutions (IFIs) operating in 18 different countries for the period 2007-2011, while controlling for firm-specific variables, namely, bank size, level of risk, listing status, and firm complexity.Design/methodology/approach: The required data to calculate different constituents of IC are derived from Bankscope database. Value Added Intellectual Coefficient (VAIC) methodology devised by Pulic is used to determine the impact of IC on financial performance of IFIs.Findings: Results indicate a significant positive relationship between VAIC and accounting performance based on return on assets (ROA). The results further indicate a significant positive relationship between accounting performance and capital employed efficiency (CEE) and human capital efficiency (HCE), but no significant relationship with regards to structural capital efficiency. Overall, the results suggest that value creation capability of IFIs is highly influenced by HCE and CEE.Research limitations/implications: The main limitation of the present study lies in its methodological tool, the VAIC methodology, which has been criticized by some researchers as not really measuring IC. Despite the inherent limitation of the VAIC methodology which relies on secondary data published in annual reports, it is still considered by some researchers as one of the best available tool to measure firms’ IC in the absence of access to detailed internal information on IC.Practical implications: The findings may serve as a useful input for Islamic bankers in managing their investments in IC within their institutions.Originality/value: The main contribution of this paper is to use a previously little-studied area, Islamic banking and finance, to identify the effect of intellectual capital on performance.

Purpose: This paper aims to explore a narrative disclosure by Muslim charity organisations (MCOs) in the UK.Design/methodology/approach: Using content analysis, this study assesses disclosure in MCOs’ trustee annual reports against the Statement of Recommended Reporting Practices (SORP) for charities using perspectives from accountability including the Islamic concept of accountability.Findings: The findings suggest disclosure to be limited in showing how transactions and activities comply with the mandatory reporting requirements. Hence, MCOs need to increase their awareness of regulatory and sector challenges, as well as self-scrutiny of their current narrative reporting practices, especially in showing their mandatory reporting and hence religious accountability.Originality/value: The paper provides important empirical data on the status quo of reporting practice by this important sub-sector. The paper provides a systematic analysis of the way trustee annual reports (TARs) are presented by MCOs and also provides a comprehensive framework for a better understanding of the minimum accountability requirements incumbent upon all charity organisations.

Purpose: This paper aims to contribute to the banking and housing market literature by proposing an alternative measure of rate of return for Islamic banks that is based on the rental rate of the property. This alternative Islamic mortgage pricing mechanism could be adopted by Islamic banks as a replacement for mortgage rates if it is found to be independent from any form of interest rates as required by Islamic law. Design/methodology/approach: By investigating the short run and long run dynamics between rental price index (RPI) and the proposed Islamic Rental Rate (RR-I) and, three selected macroeconomic indicators in the UK via autoregressive distributed lag model, the authors examine the link between RPI, RR-I and the real economy. Findings: The findings provide evidence that while RPI in the UK is significantly related to three leading macroeconomic variables, namely, gross domestic product (GDP), real effective exchange rate and interest rates measures, while RR-I is only impacted by changes in GDP. More importantly, the authors show that there is no short or long run dynamics between the rental rate and any form of interest rates. Research limitations/implications: This paper did not attempt to investigate the impact of the physical attributes of the rental property to formalize the model describing the relationship between RPI and RR-I. Also, other macroeconomic factors like household income growth, risk, house value growth rate and taxation could be included in future models. Practical implications: As Rental Rate is not linked to the macroeconomic determinants, it is therefore more stable, resilient and sustainable and, at the same time, making the financing less risky for both parties, as they are less susceptible to economic vulnerabilities. Social implications: Some calculations incorporating the proposed RR-I can also be extended to the pricing of products based on other contracts such as Tawarruq, Bai Bithaman Ajil or even Murabahah for a fairer and just pricing to both the banks and customers. Originality/value: The results suggest that Islamic banks should consider incorporating the proposed rental rate (RR-I) when pricing their home financing products, as this will lead to less dependence on interest rates for benchmarking. In addition, using the proposed rental rate (RR-I) reduces the exposure to the subjective evaluation by property valuators and speculative macroeconomic elements.