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Shariah Supervisory Board Report (SSBR) in Islamic banks: An experimental study of investors’ perception and behavior

Abdul Rafay (University of Management and Technology, Lahore, Pakistan)
Saqib Farid (University of Management and Technology, Lahore, Pakistan)

International Journal of Islamic and Middle Eastern Finance and Management

ISSN: 1753-8394

Article publication date: 24 January 2018

Issue publication date: 5 June 2018

Abstract

Purpose

The primary purpose of this study is to determine the impact of information ordering in Shariah Supervisory Board Report (SSBR) on investors’ behavior and perception about the performance of Islamic bank in terms of Shariah compliance and other conventional parameters.

Design/methodology/approach

The study used the belief adjustment model to evaluate the desired effects of ordering positive and negative information (if any) in SSBR of an Islamic bank. This study extends the previous literature on information ordering as a pioneer experimental study in emerging economies.

Findings

Evidence shows that investors and technical users of performance reports consider SSBR as significant for financial and investment decisions from the Islamic perspective. The results indicate that the primacy effect does exist and is statistically significant.

Practical implications

The SSBR provides the management with an excellent opportunity to communicate and convince the investors about Shariah compliance features of an Islamic bank. Additionally, it also highlights the functional use of impression management to manipulate the investor’ behavior and perception.

Originality/value

For the first time, this study specifically investigates the effect of conscious information ordering in SSBR of Islamic banks on investors perceptions and behaviors.

Keywords

Citation

Rafay, A. and Farid, S. (2018), "Shariah Supervisory Board Report (SSBR) in Islamic banks: An experimental study of investors’ perception and behavior", International Journal of Islamic and Middle Eastern Finance and Management, Vol. 11 No. 2, pp. 274-296. https://doi.org/10.1108/IMEFM-07-2017-0180

Publisher

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Emerald Publishing Limited

Copyright © 2018, Emerald Publishing Limited