With it being considered as avalue-added activity,theInternal Auditfunction (IAF)of a firm is one of the most important functionsin anorganization. During the last decade,the roleof this particular functionhas become very useful,especially in creating awareness regarding the Prevention, Detection and Assessment (PD&A) of fraudulent activities. In many countries, carrying out an Internal Audit isa legal compulsion for public companies, in orderto establish an effective,and efficient IAF.This study aims to explore the relationship between the various attributes of IAF(effectiveness, independence, staff training, qualification and experience),and the PD&A of fraudulent activitiesin Pakistan. For this purpose, the convenientsampling technique,for data collection,is used and the questionnaires are collected fromtherespondents belonging to Pakistan. The questionnaire has been prepared in the form of a Likert scale. Respondents for this study include (1) staff members working in the Internal Audit (IA),finance and accounting departments of the companies listed on the Pakistan Stock Exchange(PSX), and(2) staff members of firms that are engaged in external statutory audit in Pakistan. Descriptive statistics show the details regarding the demographic questions, IAFand PD&A ofthefraudulent activitiesthat take place in the companies. Moreover, in order to get to the effective and relevant results, the regression analysis is performed in order to find out if there exists any relationship between these variables. The results show that all five independent variables positively affect the PD&A of fraudulent activities. However, three of the independent variables (IAE, IAT, and IAQ) are statistically significant,whereas twoof thevariables taken into account (IAI, and IAE) are statistically insignificant. It is recommended thattheIAFshould be more independent,and effectiveso asto attainthe required results. Moreover, firms should also focus on the qualificationsand proper training of the staff that are responsible forexecutingthe IAF.
In this article, we examine the relative ability of cash flows and profitability measures to predict stock returns; whereas, the primary objective of this study is to identify which among the aforementioned predictors have a better stock prediction ability. For this purpose, we used five-year data (from 2014 to 2018) of 50 non-financial firms listed on the Pakistan Stock Exchange. We used cash flow from operations and cash flow after financing activities as cash flow measures and gross profit, operating profit, and earnings per share as profitability measures. The technique of panel regression was used in this study. We found that for stock return predictions, profitability measures provide better prediction results than cash flows.Keywords: cash flow from operations (CFO), cash flow after financing activities (CFAF), predictions, profitability, stock returns
This study evaluates the laws and regulations of Microfinance Institutions (MFIs) in Asia. It compares the regulatory framework of MFIs with institutional development and macroeconomic perspective and concludes that central banks control formal MFIs by applying legislation. Conversely, semiformal MFIs are regulated and controlled by a government body or an apex organization. Unfortunately, informal MFIs are not regulated at all. It was observed that even though regulations are effective; however, the ownership structure, governance, and internal controls are not adequate and appropriate for all types of MFIs. Since the existing rules do not apply to all MFIs, this study recommends formulating special prudential regulations for MFIs, similar to the ones used in the banking sector. Formulating regulations should be the responsibility of the government, central banks, private sector, and the donors. Furthermore, regulators should develop a separate team of qualified members to monitor the regulatory environment, protect the interest of depositors and donors, and encourage MFIs to attain sustainability as well as outreach.Keywords: central banks, Microfinance Institutions (MFIs), prudential regulations, regulatory bodyJEL classifications: G2, G21, G28
Developing economies like Pakistan, still struggling to promote the emerging concept of Corporate Social Responsibility (CSR), so this research aims to investigate the impact of CSR Disclosure (CSRD) on a Firm’s Performance (FP). This study is based on conceptual aspects of CSRD and is different because FP is measured with three different types of proxies, i.e. operational, financial and market performance. The empirical results of this research show the positive and significant impact of CSRD on a firm’s operational and financial performance but insignificant in the case of market performance. It is further concluded that firms disclosing CSR have better operational and financial performance. This study is a pioneer to uplift the importance of CSRD in Pakistan and therefore an addition to existing literature, this paper also provides different new ways to assess the link between CSRD and FP.
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