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Islamic labelling and corporate governance: a perspective of Shariah compliance firms

Sabeeh Ullah (IBMS, FM&CS, The University of Agriculture, Peshawar, Pakistan)
Muhammad Haroon (IBMS, FM&CS, The University of Agriculture, Peshawar, Pakistan)
Shahzad Hussain (Department of Business Administration, Rawalpindi Women University, Rawalpindi, Pakistan)
Ajid Ur Rehman (Faculty of Management Sciences, Riphah International University, Islamabad, Pakistan)

Journal of Islamic Accounting and Business Research

ISSN: 1759-0817

Article publication date: 22 December 2022

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Abstract

Purpose

Islamic label of an organization attracts Muslims for investment. There is a rising concern with a huge profile of corporate governance related to the Islamic rules (principles). In this context, this study aims to examine the effect of Islamic labelling on corporate governance in the Pakistani setting.

Design/methodology/approach

This study used a panel data set comprising 120 non-financial Shariah-compliant and non-Shariah-compliant Islamic firms listed on the Pakistan Stock Exchange over the period 2013–2020. For analysis, this study used static panel data estimation techniques. Moreover, for robustness check, this study also applied the system generalized method of movements procedure.

Findings

The findings deduced from empirical estimations reveal that Islamic labelling is positively associated with corporate governance. Overall, results indicate that Islamic labelling promotes corporate governance practices in Pakistan.

Originality/value

It is of utmost importance in terms of both theoretical and empirical context that Pakistan is a Muslim country having a 96.5% Muslim population, and it is evident that Muslims are allowed to execute their business under the guidance of Shariah principles. This study is unique because most of the previous literature provides empirical support related to the impact of corporate governance on capital structure, profitability and firm performance in conventional and Islamic firms. Practically, there is scarce literature on this issue.

Keywords

Citation

Ullah, S., Haroon, M., Hussain, S. and Rehman, A.U. (2022), "Islamic labelling and corporate governance: a perspective of Shariah compliance firms", Journal of Islamic Accounting and Business Research, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JIABR-03-2021-0108

Publisher

:

Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

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