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Malaysian Management Journal (MMJ) Vol. 25, July 2021

 
CONSTRUCTING A COMPETITIVENESS INDEX FOR STATES IN MALAYSIA: A PANEL DATA ANALYSIS
1Chee Ann Lim, Ku Azam Tuan Lonik & Radziah Adam
School of Distance Education, Universiti Sains Malaysia
1Corresponding author: limcheeann@usm.my
 
 
Abstract | Text
 
This study investigated the competitiveness index of the fourteen states in Malaysia. It also examined various aspects of competitiveness among states and vital elements that might influence competitiveness by utilizing a three-level hierarchical indicator system encompassing economic, social and environmental factors. An equally weighted index was applied to scrutinize the three dimensions. The index output was based on 24 indicators across six components. The critical components were economic performance, economic structure, marketization and openness, social aspects, domestic security and environmental quality. This study also examined the relationship between the components of competitiveness and economic growth for states in Malaysia by using the panel data estimation approach; a method which utilised data sets for fourteen states over a period extending from 2005 to 2016. Data were then analysed using a panel data regression model. Overall, findings showed that Selangor, where Kuala Lumpur the national capital was situated, was the most competitive state. In 2016, Kuala Lumpur was the best performer in terms of economic performance, social aspects and environmental quality. It was also found that domestic security and environmental quality were significant determinants of economic growth, which had enhanced competitiveness among states in Malaysia. A state’s performance according to the three dimensions varied greatly as there were different factors of specializations for each state. This study has proposed that each state in the federation possessed a significant economic performance, as well as substantial social and environmental development to ensure and sustain their respective state of competitiveness.
 
Keywords: Economic competitiveness, social competitiveness, environmental competitiveness, panel data, state competitiveness.
 

 
THE EFFECT OF NOMINAL EXCHANGE RATE DEPRECIATION ON TRADE IN ELEVEN DEVELOPING COUNTRIES
1Muhammad Riyadh Ghozali Lubis & Noor Al-Huda Abdul Karim
Department of Economics Faculty of Management and Economics Sultan Idris Education University,
Tanjong Malim, Malaysia
1Corresponding author: murigholisstar@gmail.com
 
 
Abstract | Text
 
This study examined the effect of nominal exchange rate depreciation on the trade balance in 11 Asian-African countries between 1980 and 2019, and within the context of an exogenously determined single structural break. The countries had persistently experienced both nominal exchange rate depreciation and upward trends in trade in goods. Using the Chow test to frame the discussion, these countries were found to be facing structural changes associated with external factors such as the commodity price crisis in South Asia and the global financial crisis. The time-series autoregressive distributed lag (ARDL) approach with bounds test for cointegration and error-correction mechanism (ECM) was also applied for the analysis. The results of the study showed a long-term cointegration between the trade in goods and other variables included. Specifically, the nominal exchange rate depreciation positively affected the trade in goods in both the long-run and short-run in most of the Asian-African countries studied. There was a positive relationship between trade and foreign direct investment in the short-run, but this relationship mostly became insignificant in the long-run. Gross domestic product had a significant impact on trade performance in goods in both the long-run and short-run in all countries studied.
 
Keywords: Nominal exchange rate depreciation, trade in goods, structural break, autoregressive distributed lag.
 

 
COMPETITION AND RATCHET HYPOTHESIS: HOW SAFE ARE MANUFACTURING COMPANIES IN SUB-SAHARAN AFRICA?
1Abiola M. A Tonade, 2Olusola Enitan Olowofela &1Wasiu AbiodunSanyaolu
1Department of Accounting, Crescent University Abeokuta, Ogun State, Nigeria
2Department of Banking & Finance, OlabisiOnabanjo University, Ago-Iwoye, Ogun State, Nigeria
2Corresponding author: olowofelaolusola@gmail.com
 
 
Abstract | Text
 
This study applied the conventional ratcheting notion that managers (agents) chose to restrict their performance because they anticipated that firms (principals) would respond to higher performance levels by raising targets or by cutting pay in a piece-rate labour environment.  A cross-sectional panel model was developed to subject this baseline notion of ratcheting hypothesis to multi-period and ex-post competitive labour market environment, bearing in mind that there was information asymmetry to both parties.  It was observed, as predicted by the theoretical model that there would be substantial ratchet effects in the absence of competition. However, when subjected to ex-post competition, the ratchet effects were reduced, regardless of whether market conditions favoured the firms or the managers and thereby making the manufacturing companies in Sub-Saharan Africa safer than when they were exposed to ratcheting in its conventional form.
 
Keywords: Ratcheting hypothesis, ratchet effects, information asymmetry, ex-post competition, Sub-Saharan Africa.
 

 
CORPORATE GOVERNANCE AND STOCK MARKET REACTION TO SEASONED EQUITY OFFERING ANNOUNCEMENT BY FIRMS IN NIGERIA
1Mohammed Aminu Bello, 2Aminu Kado Kurfi & 3Bashir Tijjani 
1&2Department of Business Administration and Entrepreneurship, Faculty of Management Sciences,
Bayero University Kano, Nigeria 
3Department of Accounting, College of Business Administration, Imam AbdulRahman Bin Faisal University, Dammam, Saudi Arabia 
1Corresponding author: mabello.bus@buk.edu.ng
 
 
Abstract | Text
 
This study examined the effect of corporate governance variables of board independence, institutional ownership, managerial ownership, board size, and director expertise on the market reaction to seasoned equity offering (SEO) announcements by firms in the Nigerian stock market. The event study methodology was employed, and abnormal returns were computed using the market model. A total of 62 announcements by 38 firms listed on the Nigerian stock exchange from 1st January 2006 to 31st December 2016 were included in the analysis. The study recorded significant positive cumulative abnormal returns before and after the announcement day, and a significant negative cumulative abnormal return upon the announcement day of SEOs. Similarly, significant positive cumulative abnormal returns were recorded six months before the SEO announcement day and negative significant cumulative abnormal returns six, twelve, and twenty-four months after the announcements. Furthermore, there were significant cumulative abnormal returns upon SEO announcements for all the proxies of corporate governance assessed by the study. The implication of the findings of negative significant cumulative abnormal returns on the day of the announcement and beyond was consistent with previous arguments that firms issuing SEOs earn negative abnormal returns on the day of the announcement was the result of the information asymmetry between managers and investors. By contrast, the significant cumulative abnormal returns based on corporate governance suggested that corporate governance significantly impacted on SEO announcement returns in Nigeria. These findings suggest that policy makers should pay more attention to directors’ expertise, institutional ownership, board independence, and board size, as our results showed that investors might view them as dependable pointers of positive corporate information for the market, thus guaranteeing the best use of SEO proceeds.
 
Keywords: Corporate governance, event study, seasoned equity offering, stock market
 

 
QUALITY OF WORK LIFE AND LIFELONG LEARNING AMONG  WORKING ADULTS IN MALAYSIA: THE MEDIATING ROLE OF EMPLOYEE ENGAGEMENT 
1Bradley C.Y. Ho, 2Norizah Mohd Mustamil & 3Sharmila Jayasingam
Faculty of Business and Accountancy, University of Malaya, Malaysia
1Corresponding author: bradley@live.com.my

Abstract | Text

There has been a significantly increasing emphasis on the quality of interactions between employers and employees in the context of managerial and organisational studies in Malaysia. To encourage a desirable workforce, organisations often list factors associated with quality of work life, employee engagement, and lifelong learning as contributors to achieving optimal organisational goals. However, do quality of work life and employee engagement truly lead to employee disposition for lifelong learning? This paper aims to explore quality of work life and employee engagement as precursors to establishing a workforce that embraces lifelong learning. Structural Equation Modeling analysis was employed on 472 samples obtained from working adults holding different positions in various organisations in the country. The empirical results demonstrate that quality of work life leads to employee engagement, which in turn, positively contributes to lifelong learning. The results also suggest that employee engagement fully mediates the relationship between quality of work life and lifelong learning. This study provides a more in-depth understanding of what it takes to create a workforce that engages in continuous learning, and sets the tone for compelling narratives in rolling out organisational vision and mission for lifelong learning in Malaysia.
 
Keywords: Employee engagement, lifelong learning, quality of work life.
 

 
ASSESSING THE PREDICTABILITY OF CRYPTOCURRENCY PRICES 
1Ruzita Abdul Rahim, 2Pick Soon Ling & 3Muhammad Airil Syafiq Mohd Khalid
1Centre for Global Business and Digital Economy StudiesFaculty of Economics and Management,
Universiti Kebangsaan Malaysia
2School of Business and Management, University College of Technology Sarawak
3School of Economics, Finance and Banking, Universiti Utara Malaysia 
1Corresponding author: ruzitaar@ukm.edu.my 
 
 
Abstract | Text
 
The predictability of asset prices works against the notion of an efficient market where asset prices reflect all available and relevant information. This paper examined the predictability of Bitcoin and 51 other cryptocurrencies that have been classified into the following five categories: Application, Payment, Privacy, Platform, and Utility. Two market efficiency tests (Ljung-Box autocorrelation and Runs tests) were run on the daily returns of the 52 unique cryptocurrencies and the MSCI World index from 28 April 2013 to 30 June 2019. The results showed that Bitcoin was consistently efficient, whereas most of the other cryptocurrencies and even the MSCI World index were not, implying that their prices were predictable. Categorically, Payment altcoins were the most consistent in showing inefficiency. Since altcoins in this category also recorded the third highest risk-adjusted returns, investors with advanced technical trading strategies had a great chance of exploiting the market information to make extremely high abnormal returns. 
 
Keywords: Cryptocurrency market efficiency, cryptocurrency predictability, cryptocurrency types, Payment altcoins, Platform altcoins.
 

 
THE EFFECT OF FRAUD ON PROFITABILITY OF LISTED DEPOSIT MONEY BANKS IN NIGERIA 
1Abass Wahab Olabamiji & 2Salami Suleiman
1&2Accounting Department, ABU Business School Ahmadu Bello University, Zaria, Nigeria
2Corresponding author: suleiman_salami@yahoo.com 
 
 
Abstract | Text
 
The increasing rate of fraud occurrence and poor profitability rate in the listed Deposit Money Banks (DMBs) in Nigeria calls for a research investigation. To unravel the likely connection between fraud and profitability, this study has examined the effect of fraud on the profitability of listed DMBs in Nigeria. To achieve this objective, the study adopted a correlational research design and utilised secondary data extracted from the Nigerian Deposit Insurance Commission (NDIC) and published financial statements of the DMBs. The study focused on 14 listed DMBs for a six-year period (2012-2017). Panel multiple regression technique was used to estimate the model of the study. The findings showed that fraud (proxied by actual loss from fraud and staff involvement in fraud) has a negative and significant effect on profitability (proxied by return on asset) of listed DMBs in Nigeria. In line with the findings, this study has recommended that listed DMBs should establish fraud detection mechanisms which will entail the setting up of an efficient, reliable and functioning fraud detection unit to monitor transactions that may be susceptible to fraud.
 
Keywords: Deposit money banks, fraud, loss, Nigerian deposit insurance commission, profitability.  
 

 
PROFITABILITY PERFORMANCE ANALYSIS: THE EVIDENCE FROM PRIVATE TELECOMMUNICATION FIRMS IN MALAYSIA
1Suhaily Maizan Abdul Manaf, 2Wan Anisabanum Salleh, 3Zetty Zahureen Mohd Yusoff & 
4Nor Fazirah Bidin
1,2&4Faculty of Business and Management, Universiti Teknologi MARA, Terengganu, Malaysia
3Faculty of Business and Management, Universiti Teknologi MARA, Puncak Alam, Selangor, Malaysia
1Corresponding author: suhailymaizan@uitm.edu.my  
 
 
Abstract | Text
 
This paper examines the macroeconomic factors influencing the profitability performance of private telecommunication firms in Malaysia. A yearly basis data between 2007 and 2016, which contained a total number of 49 data observations were analyzed using the Random Effects Model to estimate the factors of concern. The sources of these data have been predominantly extracted from DataStream. The variables involved in this investigation were liquidity (LIQ), leverage (LEV), firm size (SIZE), and gross domestic product (GDP). This study has been motivated by the declining profitability performance of private telecommunication firms in Malaysia, which has been attributed to the decreasing return on assets. The findings suggest that leverage has a significant and negative relationship with return on assets, while liquidity has a negative insignificant towards the firms’ profitability. On the other hand, firm size and gross domestic product have a substantial and positive relationship with return on assets. Moreover, the findings seemed to suggest that the bigger the size of a firm, the higher the total assets would be, which in turn, would improve the firm’s profitable performance. In sum, the prerequisite attribute that a telecommunication firm needed to possess in attaining high profitability performance was its strong and high productivity in the management of its total assets.
 
Keywords: Telecommunication industry, profitability performance, liquidity, leverage, firm size, Malaysia.
 

 
DETERMINING THE FINANCIAL PERFORMANCE OF MALAYSIAN GREEN TECHNOLOGY COMPANIES USING TOBIN’S Q   
1Noor Sharida Badri Shah, 2Noor Hafizha Muhamad Yusuf, 3Rozihanim Shekh Zain, 4Sofia Alia Rosli & 5Mohd Eddi Akmar Azman
1,2,3&4Faculty of Business and ManagementUniversiti Teknologi MARA, Perlis, Malaysia
5Malaysian Green Building Confederations, Kuala Lumpur, Malaysia 
1Corresponding author: sharida699@uitm.edu.my
 
 
Abstract | Text
 
Massive technology, business pressure and the growth of global market penetration have led to most businesses becoming more environmentally friendly. The issue of climate change, waste management, air pollution and water pollution have all challenged the practice of business ethics, notwithstanding the ever-present pressure for companies to be more competitive in the marketplace. To be more financially sustainable, most of the businesses are forced to keep the balance between resources available and future sustainability in the long-term period. To ensure the success of sustainability, green technology is one of the most important initiatives to motivate companies to become more financially sustainable in the future. Thus, the purpose of this study is to examine the factors that have influenced the financial performance of Malaysian green technology companies using Tobin's Q. The dependent variable is Tobin’s Q which represents the firm’s market value, while independent variables are measured by carbon productivity, waste productivity, energy productivity, growth and firm size. The data for the study came from 10 selected green technology companies listed in the Bursa Malaysia and were the top-ranked eco-friendly companies in Malaysia. The findings indicate that all independent variables (growth, carbon productivity, waste productivity and energy productivity) were significant, but firm size was not significant. The findings imply that by adapting to the use of green technology, companies benefited a lot in terms of minimizing cost, sustaining a healthy environment, as well as helping companies to become sustainable in the long term. 
 
Keywords: Tobin’s -Q, green technology companies. financial performance, sustainability.
 

 
FOREIGN CAPITAL INFLOWS AND MANUFACTURING SECTOR GROWTH IN NIGERIA
1Idris Ahmed Sani, 2Ajengbe Abidemi Samuel & 3Wada Emmanuel Ome
1&2Department of Economics, Kogi State University, Anyigba, Nigeria
3Department of Economics, Federal University of Lafia, Nigeria
1Corresponding author: sanii7712@gmail.com
 
 
Abstract | Text
 
The study examined the impact of foreign capital inflow on manufacturing sector growth in Nigeria using time series data from 1986 to 2019. The study specifically sought to examine the causal relationship between foreign capital inflows and the growth of the manufacturing sector in Nigeria in the long run The study employed the Autoregressive Distributed Lag (ARDL) estimation technique to account for the impact of foreign capital inflows on the manufacturing sector growth in Nigeria. The study utilized the Contribution of Manufacturing Sector to Gross Domestic Product (MGDP) as proxy for manufacturing sector growth. Manufacturing sector growth was the dependent variable while foreign direct investment (FDI), foreign portfolio investment (FPI) and foreign Aid (FOA) were the independent variables, and were regarded as proxies for foreign capital inflows. The study results    revealed that foreign capital inflows through the FDI had a significant positive impact on contributions of the manufacturing sector to gross domestic product (GDP). The study also revealed that foreign capital inflows through the FPI had a significant positive impact on contributions of the manufacturing sector to the GDP. The study further revealed that foreign capital inflows through the FOA had a significant positive impact on contributions of the manufacturing sector to the GDP. Based on these findings, the study has recommended that the Nigerian government should promote foreign capital inflows through the FDI in order to achieve the desired level of manufacturing sector growth in the country’s economy in the long run. The government should also encourage foreign capital inflows through the FPI in order to attain the desired level of manufacturing sector growth in the Nigerian economy. Finally, the government should also support foreign capital inflows through the FOA in order to attain the desired level of manufacturing sector growth in the Nigerian economy in the long run.
 
Keywords: foreign capital inflows, manufacturing sector, growth, foreign direct investment, foreign portfolio investment and foreign aid.