Evaluating diversification approaches: A comparative analysis of traditional, Islamic indices in the United Kingdom, and alternative investment options

2024-12-13T22:48:48-06:00

This study explores the diversification potential of the United Kingdom’s (UK) conventional and Islamic stock indices, Bitcoin, gold, crude oil, and the GBP/USD exchange rate from 2011 to 2022 using methodologies such as VECM, MODWT, MGARCH-DCC, and CWT. The findings indicate that UK indices, gold, and Bitcoin respond to changes in crude oil prices and GBP/USD rates, whereas GBP/USD and crude oil show low correlation, offering diversification benefits. Gold consistently maintains a low correlation with UK indices during global disruptions, such as the 2020 pandemic and the 2022 Ukraine-Russia conflict, reinforcing its reliability as a diversification asset. However, Bitcoin shows potential as a diversification tool despite its high volatility, which is a concern. Crude oil’s effectiveness as a diversification asset diminishes for holding periods beyond 64 trading days. The study also reveals that the global financial crisis significantly impacted both UK Islamic and conventional indices, challenging the role of the Islamic index as a safe haven and suggesting that Shariah screening may not necessarily shield Islamic markets during economic downturns. These findings provide investors with essential insights into selecting equity indices and commodities for portfolio diversification and underscore the importance of advanced methodologies to understand correlation and volatility dynamics.

Effects of audit committee chair characteristics on audit quality: Empirical evidence from Saudi energy and materials sectors

2024-12-21T06:20:34-06:00

This study examines the effects of audit committee (AC) chair characteristics on audit quality in Saudi Arabia. This study applies logistic regression to investigate how AC chair independence, busyness, and expertise influence audit quality. The sample covers 282 firm-year observations of energy and materials companies listed on the Saudi stock exchange from 2017-2022. The results show a positive correlation between AC chair independence and expertise and higher audit quality, while a negative correlation exists with AC chair busyness. The results underscore the critical role of AC chair attributes in enhancing audit quality, aligning with findings from prior studies. The findings address a significant gap in how AC chair characteristics may affect audit quality in Saudi Arabia's unique context. The study's empirical contributions are particularly significant given the limited attention this topic has received in the context of a developing Middle Eastern economy. The analysis not only sheds light on the influence of AC chair characteristics but also provides actionable insights for optimizing audit committee structures to improve financial monitoring in light of ongoing Saudi reforms. The robust methodological framework and the consistency of the results with existing literature support the study’s validity and reliability. The findings advocate for strategic enhancements in AC chair selection criteria to bolster audit quality amidst the evolving governance landscape in Saudi Arabia.

Asian Economic and Financial Review

Evaluating diversification approaches: A comparative analysis of traditional, Islamic indices in the United Kingdom, and alternative investment options

Effects of audit committee chair characteristics on audit quality: Empirical evidence from Saudi energy and materials sectors