Journal of Finance and Accounting Research <div class="row">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> <p>&nbsp;</p> en-US <p>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Commons Attribution 4.0 International License.&nbsp;Thus, work submitted to UMT Journals implies that it is original, unpublished work of the authors; neither published previously nor accepted/under consideration for publication elsewhere.&nbsp;On acceptance of a manuscript for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> (Editorial Office JFAR) (Editorial Assistant) Thu, 28 Feb 2019 00:00:00 +0100 OJS 60 Credit Risk Management: Evidence of Corporate Governance in Banks of Pakistan <p><em>The paper evaluates the impact of corporate governance on the Loan Loss Provisions (LLPs) of banks. </em>Linear<em> regression model is applied on a strongly balanced panel data obtained from eighteen commercial banks of Pakistan for the years 2011-2016. The study considers several corporate governance mechanisms such as independent directors, </em>board<em> of directors, Chairman-CEO duality, attendance in board meetings etc. and takes LLPs as </em>proxy<em> for credit risk. Our findings suggest that with reference to Pakistani banks, corporate governance does have an influence on loan loss provisioning. The results clearly indicate that larger boards in Pakistani banks provide ineffective governance through increased loan loss provisioning, while independent directors and director attendance at meetings do not seem to matter. On the other </em>hand<em> where one strong family member dominates, the CEO-Chairman duality appears to induce a reduction in the percentage of LLPs and therefore causes decreases in credit risk. This reflects that the separation of these two positions could lead to higher accountability and responsibility, where there is higher transparency with segregation of duties. The paper concludes that effective corporate governance plays an important role in credit risk management in banks and recommends that regulations are needed to further endorse the validity of CEO-Chairman duality in Pakistan.</em></p> Damian Honey, Rubeena Tashfeen, Saqib Farid, Ramla Sadiq ##submission.copyrightStatement## Thu, 28 Feb 2019 00:00:00 +0100 The Valuation and Optimal Policies of Puttable Convertible Bonds <p><em>American-style convertible bonds commonly contain the put provision that allows the investors to put or sell their holdings to the issuer at preset prices and dates. The embedded put option includes a free boundary in addition to the conversion boundary. Because of the correlation of two moving boundaries with the convertible price, the valuation of puttable convertible bonds remains a classical problem in quantitative finance. This paper presents the valuation model of puttable convertible bonds under the Black-Scholes framework. We distinguish between the conventional pricing model and the current work by the realization of a jump in the put price across the hitting time. The jump condition permits the derivation of two recombining differential systems and we explore the impact of jump effect on the pricing dynamic of this innovative financial derivative.</em></p> Bolujo Joseph Adegboyegun ##submission.copyrightStatement## Thu, 28 Feb 2019 00:00:00 +0100 Impact of Inventory Turnover on the Profitability of Non-Financial Sector Firms in Pakistan <p>&nbsp;</p> <p><em>The purpose of the study is to investigate the effect of inventory turnover on firm profitability. Three dependent variables including return on asset, return on equity and net profitability margin ratio have been employed for analysis. The variable of interest is inventory turnover ratio and three control variables are sales growth, net working capital and firm size. The sample consists of 79 companies from cement, sugar and automobile sectors of Pakistan. Data ranges from the year 2006 to 2015. Generalized Method of Moment (GMM) has been applied to capture the endogeneity. Three hypotheses were developed to check the relationship between dependent and independent variables. The results of the study show that inventory turnover ratio does not significantly affect return on asset. However sales growth ratio, net working capital, and firm size are significantly affected by inventory turnover. &nbsp;In the second model, inventory turnover ratio, networking capital (NWC), log of sale (LOS) and sales growth ratio do not affect return on equity. In the third regression model, the inventory turnover ratio and NWC do not affect net profitability margin ratio but LOS affects it. The study recommends that the management should pay attention to those variables which play a pivotal role in determining the profitability of firms.</em></p> Umar Farooq ##submission.copyrightStatement## Thu, 28 Feb 2019 00:00:00 +0100 Investment Behaviour of Analysts: A Case Study of Pakistan Stock Exchange <p><em>Security prices in efficient markets reflect all relevant information. Past price formations and even fundamental analysis cannot guarantee abnormal returns consistently to any pre-identified strategy or market participant, be they novice or expert traders. There have been various studies conducted with the aim to test market efficiency in emerging markets. However, in this study, we have surveyed the professional investment community and have studied their stated actions in making investments. Our results indicate the prevalence of herding and overconfidence in professional analysts. We also found that analysts extrapolate the past into future forecasts. We also discovered an association between demographic characteristics and the choice of security valuation methods that the analysts use. In line with Chevalier and Ellison (1998), we found that younger analysts herd less than the older ones.</em></p> Salman Ahmed Shaikh ##submission.copyrightStatement## Thu, 28 Feb 2019 00:00:00 +0100 Impact of Leverage on Earning Management: Empirical Evidence from the Manufacturing Sector of Pakistan <p><em>The current study examines the impact of leverage on earning management in the manufacturing sector of Pakistan. It selects a list of 159 non-financial firms listed at Pakistan Stock Exchange (PSE) for a period of 7 years. The study has used Modified Jones Model 1995 as proxy of earning management. Independent variable is leverage while the three control variables are growth, firm size and Return on Assets (ROA). The findings reveal that a significant positive relationship exists between leverage and earning management activities while other variables ROA and firm size are also found to be significant. However, no significant relationship is found between growth and earning management activities. Moreover, this study has discussed the relationship between earning management and discretionary accruals. The implications of the study for different stakeholders have been discussed also.</em></p> Aysha Asim, Aisha Ismail ##submission.copyrightStatement## Thu, 28 Feb 2019 00:00:00 +0100