ISLAMIC FINANCE RESEARCHES
Year:2015 | Volume:4 | Issue:2 (8)|Papers Count:6

Because Iran's economy is based on oil industry, related issues in this area are very important. One of the important issues in this context is the low participation of oil industry in the total portfolio of the insurance industry that suggests numerous challenges in the interaction between the two. In addition, the imposition of international sanctions against oil projects and oil shipping insurance have created new sets of problems which call for scientific and applied researches in this field. Various investigations indicate that the failure of domestic insurance companies in entering into oil industry is related to lack of capital capacity in Iran's insurance industry.This practical study has used an analytical descriptive method which tries to suggest different solutions for interaction between capital markets and insurance to solve the main issue which is “lack of capital capacity in Iran's insurances", through the risk securitization which provides a new financial instrument called “Islamic Reinsurance Financial Securities (Reinsurance Sukuk) " to transfer the risk in oil industry based on Imamia jurisprudence. This instrument is introduced as a comprehensive solution to be utilized in the interaction between insurance industry and the capital market, and has gained more importance especially under international sanctions when the government has established specific funds for supporting reinsurance policies, thus converting the sanction threat to opportunity. In addition, Reinsurance Sukuk is an efficient solution for increasing capital capacity of insurance companies in non-sanctioned periods. Very high standards in oil industry and the low probability of incurring damages on the one hand, and heavy demanded premium on the other, have increased the efficiency and attractiveness of these instruments.

Since old times, searching the causes of shariah rulings in Islamic resources has been one of the common methods in ijtihad so they could be able to generalize the ruling from one topic to another. Riba has been one of the most important challenges in Islamic economy that has been taken into consideration especially in the recent century following the arrival of capitalism. One of the newest interpretations for solving this challenge in Islamic banking system is the theory of "assigning riba to returns on consumption loans". In fact, some Islamic scholars have separated production loans from consumption ones. They believe that getting interest in consumption loans is prohibited according to shariah, but in production loans it is allowed. They discuss and reason that getting interest in production loans doesn't lead to dholm and therefore, there is nothing wrong with it. But in consumption loans, getting interest involves dholm and is prohibited.This research surveys the causality of dholm in prohibition of riba in production and consumption loans with descriptive-analytic methodology.The result is that dholm cannot be the exclusive cause of prohibition of riba and the latter's banning doesn't depend on dholm. Thus, there isn't any difference between consumption and production loans as far as riba prohibition is concerned.

Methodologies adopted by the conventional management accounting in selecting between two or more alternative courses of action, both in the long-term and short-term decision-making, conflict with the overall objective of Islamic enterprises. The paper explores the relevant literature (including the Quran and the Hadith) to ascertain the objective of an Islamic enterprise and suggests an alternative approach in making a choice among various courses of action that align with the Islamic socio-economic objective. It is also suggested that both in long-term and short-term decision-making, cost-benefit comparison (where cost includes negative externalities) rather than discounted cash flow techniques should be adopted in making a final choice among alternatives to achieve islamic objectives. The research is descriptive and has used critical analysis to evaluate the current decision-making techniques in management accounting. The paper has not considered other objectives that may be pursued by an organization besides profit maximization. It has also explored the Islamic perspective of the conventional management accounting, rarely observed by scholars in this field.

There is an increasing concern among financial statements users about the frauds occurring in the business organizations. The unexpected collapse of corporate giants such as Enron and WorldCom has driven those interested to pay more attention to the unethical practices in accounting systems. The phenomenon of earnings management is seen as one of the most controversial issues facing the accounting profession during the last few decades. It has been argued that earnings management misleads the users of financial statements. This is because when the managers alter earnings, the financial statements do not accurately reflect the economic wealth of the company, which ultimately leads to the gross violation of stakeholders' trust. The objective of this paper is firstly to address the ethical issue of earnings management and evaluate the related research progress where a structural framework based on Islamic beliefs can provide some insights into the behavioral pattern and economic actions that could be undertaken to reduce or eliminate the practice of earnings management. Hence, the paper proposes a structural framework of Islamic beliefs and the practice of earnings management (derived from the Quran and sunna) that function as guidance for managers towards a more proper manner.

As financial intermediaries, banks seek ways to accumulate capital, along with using other factors of production. Islamic banking uses various methods to meet the needs of its clients. In fact, other than having economic applications, these methods should conform to religious regulations. One of the facilities used for fulfilling manufacturers' need for financing in riba-free banking is salaf-based facilities. Due to banks' risk aversion and their lack of interest in participating in the real sector of economy, banks have never truly implemented such facilities. However, banks should always pay attention to financing with the aim of production and with respect to religious law.This descriptive-analytical study was carried out using library resources. It aimed at verifying this hypothesis: "Specialized commodity exchange can assist Islamic banking in reviving the implementation of salaf commodities for the products traded on specialized commodity exchange." In fact, banks' exploitation of the potentials of active institutions in the capital market leads to decreasing costs, and the range of activities in various economic sectors.

Corporation as a legal entity is distinct from its founders. This separation enables a business to either flourish or fail separately from the personal assets and interests of its members (whether owners, directors or employees). The advantages of untying a business from its founders are such that the corporation has today become the most common form of commercial entity around the world. But the separation also creates risks.Without a proper structure and allocation of duties and rights, and without clarity in decision-making processes, corporations can quickly become incapable of generating any wealth. Without adequate safeguards, corporations can become vulnerable to abuse, with insiders using corporate assets for personal gain to the detriment of other stakeholders. If such abuses become widespread in an economy, they can deter investors from participating in any corporation. The quality of the rules and regulations governing corporations is therefore fundamental to functioning markets and wealth-generating economic activity. In this study, we answer the following question: Does improving the protection of minority shareholders affect the value of capital markets in different countries? To answer this question, by using data from the World Bank shareholder protection index, we estimate the effect of protecting minority shareholders on the size of capital market in 27 countries (upper middle income countries, including Iran) for 2006 to 2012. The results show that the legal protection of minority shareholders has positive effect on the capital markets.