The paper is investigative, as the researchers utilized surveys to understand the operative mechanisms of the Eastern state financial managers. The data was then compared with the European and North American financial and theory practices. The specific place for this research was in the Arab Gulf region. The primary area of survey majored on the managers’ capital budget, capital, corporate governance, and capital structure. This project was based on Harvey and Graham’s survey design; however, the questions had two additions, which discussed corporate governance. The third question was an addendum to investigate whether the firms’ financial instruments comply with Islamic laws (Chazi et al., 2010). The authors reveal this survey as unique, as it permitted the interpretation of managers’ practices within an institutional environment, which was peculiar.
The authors reveal the Islamic finance institutions, which are located in the Arab Gulf, to operate on a resolved consideration of dividing the commercial law into five categories. The categories were the German civil, common, French civil, socialists, and Scandinavian laws. However, these laws were able to offer specific assessments of the legal government systems occurring in this category. The rules are essential in their usury, as they determine how firms finance their activities externally through equity and debt.
Study Sample and Results
The study considered six Islamic nations, including Kuwait, Bahrain, Qatar, Oman, Saudi Arabia, and the UAE. The countries operate on legal systems with civic code anchored on the Sharia law, with single commercial codes. The survey is based on a small population of only 479 firms, which are publicly listed. The results revealed that Middle Eastern firms finance approximately 20 percent of the total assets on long-term debts. The USA, on the other hand, finances approximately 30 percent on long-term debts.
Reference
Chazi, A., Terra, S. R. P., & Zanella, F. C. (2010). Theory versus practice: Perspective of Middle Eastern financial managers. European Business Review, 22(2). 196-221. Web.