Journal of Finance and Accounting Research <div class="row" style="text-align: justify;">The Journal of Finance and Accounting Research (JFAR) is a multidisciplinary international journal of the Department of Finance, School of Business and Economics (SBE), University of Management and Technology (UMT), Lahore, Pakistan. JFAR is committed to publishing high-quality studies in finance and related fields and is widely circulated, both nationally and internationally.&nbsp;Accounting, Finance &amp; Auditing are seen as essential components for the successful implementation of market-based development policies supporting economic liberalization in the rapidly emerging economies. JFAR publishes research articles and reviews within the whole field of&nbsp; Accounting, and it will continue to provide information on the latest trends and developments in this ever-expanding subject.</div> Department of Finance, School of Business and Economics, University of Management and Technology, Lahore, Pakistan en-US Journal of Finance and Accounting Research 2617-2232 <p style="text-align: justify;">UMT journals follow an open-access publishing policy and full text of all articles is available free, immediately upon acceptance. Articles are published and distributed under the terms of the Creative Commons Attribution 4.0 International License.&nbsp;Thus, work submitted to UMT Journals implies that it is original, unpublished work of the authors; neither published previously nor accepted/under consideration for publication elsewhere.&nbsp;On acceptance of a manuscript for publication, a corresponding author on the behalf of all co-authors of the manuscript will sign and submit a completed Author Agreement Form.</p> Option Compensation and Optimistic Bias in Management’s Earnings Forecasts <p>We examine the relation between the option compensation received by corporate managers and the extent of optimistic bias in their earnings forecasts. Specifically, we are interested in the extent to managers with a high amount of option compensation tend to have a self-serving optimism. We examine whether there is evidence consistent with the argument that managers have a self-serving interest to issue optimistic forecasts since their compensation is a function of stock price and higher earnings usually result in a higher share price. We hypothesize that management’ optimism (optimistic bias in their earnings forecasts) increases as their stock option compensation increases. Our empirical evidence indicates that highly compensated managers are associated with the likelihood of issuing upwardly biased (i.e. more optimistic) earnings forecasts.</p> Yu-Ho Chi David A Ziebart Terry Campbell ##submission.copyrightStatement## 2019-08-31 2019-08-31 Financial Development, Fiscal Policy and Economic Growth: The Role of Institutional Quality in Pakistan <p>The study examines the influence of financial development, fiscal policy, and institutional quality on the growth of Pakistan economy. We investigate whether financial development and or fiscal policies promote the economic growth. We also analyse the effect of institutional quality on economic growth of Pakistan. We use time series data from 1985-2016 and use GDP to proxy economic growth. We use unit-root tests to check for stationary of our sample. We perform a logarithmic transformation on the series to reduce outlier effects and use Autoregressive Distributed Lag (ARDL) Model. The results show that financial development and revenue have a positive impact on growth. Our study results implicate that sound, strategic, and result-oriented policies should be formulated to transform our institutions and financial sectors into well organized, powerful, and trusted frameworks. These transformations will ensure efficient and productive utilization of savings.</p> Sidra Munir Zia-ur-Rehman Rao S Sana ##submission.copyrightStatement## 2019-08-30 2019-08-30 Macroeconomic and Idiosynchartic Determinants of Non-Performing Loans in South Asian Countries: Evidence From Pakistani Banking Sector <p>Using panel data approach in the Pakistan banking sector over the period 2010 to 2016, we examine the bank-specific and macroeconomic determinants of non-performing loans. &nbsp;We use quantitative research design with OLS random effect model. Furthermore, we use various regression and correlation analysis in this study. We find that rise in capital adequacy ratio, bank size, GDP growth rate, and inflation, reduces the non-performing loans (NPL) ratio. Our results also show that a rise in loan loss provisions enhances the NPL ratio. Our results suggest that banks with poor asset-quality can sabotage the growth of fiscal as well as the economic sector. Outcomes of the study emphasis on the need to clear-out the NPLs to keep financial sector sound. NPLs can cause high loan loss provisions which affect the capitalization of banks that ultimately impacts fiscal and economic growth. Bank supervisory agencies should therefore pay attention to monitory and macroeconomic policies of the banks. This study examines the impact of idiosyncratic and macroeconomic determinants of non-performing loans on banks’ asset quality using recent data from 2010 to 2016, the time period when major banking sector reforms were launched.</p> Naseem Ashraf Qurrat Ul Ain Butt ##submission.copyrightStatement## 2019-08-30 2019-08-30 Sources of Banking Sector Development: Case of Pakistan <p>Banking sector development is one of the key elements benchmarking economic growth. Several empirical studies for several instances have indicated a positive relationship between banking sector development and economic growth. This study intends to examine the sources of banking sector development of Pakistan, using capital formation, interest rate, trade deficit, general price level and remittances as the proposed indicators. There is a lack of studies which investigated the impact of investment and trade deficit on banking sector development. The empirical data for the study is taken from world development indicators for 38 years. For the reliable estimates, ARDL cointegration technique has been used to estimate the long run determinants of banking sector development. Domestic credit to private sector has been used as a proxy for the banking sector development because of its market orientation. The results show that increase in the investment, imports and general price level leads to increase in the provision of domestic credit which leads to banking sector development.</p> Afia Mushtaq Noman Arshed Muhammad Shahid Hassan ##submission.copyrightStatement## 2019-08-31 2019-08-31 Analyzing the Arbitrage Opportunities and their Determinants in Deliverable Future Contracts: Evidence from Pakistan <p>This study explores the arbitrage opportunities in Deliverable Future Contracts (DFC) due to mispricing and the factors affecting it. We use the cost of carry model to calculate the fair prices of futures. We use mispricing as a direct measure of arbitrage opportunities. With one-year daily data collected from the data portal of Pakistan Stock Exchange, we calculate mispricing for twenty-two stock futures. Summary statistics of mispricing confirm the presence of arbitrage opportunities in this market. We also examine the relationship of mispricing with the time to contract expiry, stock return volatility, the trading volume of ready and future market, and open interest. Tobit regression results indicate that apart from open interest, all other factors possess significant explanatory power for mispricing.&nbsp;</p> Meriam Chuhdary Aisha Ismail ##submission.copyrightStatement## 2019-08-30 2019-08-30