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1 – 10 of 323Naji Mansour Nomran and Razali Haron
This paper aims to systematically review the existing studies on the relationship of Sharī'ah governance (SG), as represented by the Sharī'ah supervisory board (SSB), with firm…
Abstract
Purpose
This paper aims to systematically review the existing studies on the relationship of Sharī'ah governance (SG), as represented by the Sharī'ah supervisory board (SSB), with firm performance of Islamic banks (IBs), to suggest opportunities for future research in this field.
Design/methodology/approach
By adopting a systematic literature review, 21 empirical and theoretical papers published in Scopus concerning the relationship between SSB and performance of IBs were selected for review and analysis.
Findings
In light of the existing research studies' limitations, this paper suggests that the effect of SSB on IBs' performance still requires more empirical analyses using alternative analytical methods, alternative measures, and different periods (during crisis and non-crisis). Besides that, these studies should take into account the differences across jurisdictions in their SG models, the degree of agencies' intervention in SG practices, the control over cross-memberships of scholars, and the differences across IBs in the position of SSB in the organization structure.
Practical implications
The analysis undertaken in this paper would address the literature gaps on the effect of SSB on IBs' performance as this study serves as a guide for the researchers, academicians, and interested researchers from Islamic international autonomous non-for-profit organizations, e.g. AAOIFI and IFSB in research related to this important area. Importantly, the findings of this study would support regulators and related authorities across jurisdictions with suggestions on improving the current SG practices.
Originality/value
This paper presents a critical review of the existing research on SSB and IB performance and suggests new variables, measurements, analytical methods, and new issues for researchers in this area. Thus, it identifies the literature gap that still needs further empirical investigation and a suitable way to close it.
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Mariem Ben Abdallah and Slah Bahloul
This study aims at investigating the impact of the disclosure and the Shariah governance on the financial performance in MENASA (Middle East, North Africa and Southeast Asia…
Abstract
Purpose
This study aims at investigating the impact of the disclosure and the Shariah governance on the financial performance in MENASA (Middle East, North Africa and Southeast Asia) Islamic banks.
Design/methodology/approach
We use the Generalized Least Squares (GLS) regression models to check the interdependence relationship between the disclosure, the Shariah governance and the financial performance of 47 Islamic banks (IBs) from ten countries operating in MENASA region. The sample period is from 2012 to 2019. In these regressions models, Return on Assets (ROA) and Return on Equity (ROE) are the dependent variables. The disclosure and the Shariah governance indicators are the independent factors. To measure the Shariah governance, we use the three sub-indices, which are the Board of Directors (BOD), the Audit Committee (AC) and the Shariah Supervisory Board (SSB). Size, Leverage and Age of the bank are used as control variables. We also used The Generalized Method of Moments (GMM) and the three-stage least squares (3SLS) estimations for robustness check.
Findings
Result shows a negative relationship between the disclosure and the two performance measures in IBs. Furthermore, as far as the governance indicators are concerned, we found that the BOD and AC, as well as the BOD and SSB, have a positive and significant impact on the ROA and ROE, respectively. This reveals that good governance had a significant association with higher performance in MENASA IBs.
Originality/value
The paper considers both IBs that adopt mandatory as well as voluntary AAOIFI standards and the GLS method to investigate the impact of the AAOIFI disclosure and the Shariah governance on ROA and ROE. Also, it uses the GMM and the 3SLS estimations for robustness check. It is relevant for researchers, policymakers and stakeholders concerned with IBs' performance.
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Naji Mansour Nomran and Razali Haron
There is much debate in the literature about how the performance of Islamic banks (IBs) should be measured. Basically, IBs’ business models are different from that of conventional…
Abstract
Purpose
There is much debate in the literature about how the performance of Islamic banks (IBs) should be measured. Basically, IBs’ business models are different from that of conventional banks; thus, the performance of IBs should be measured by using a Sharīʿah-based approach. This paper considers zakat (Islamic tax) as an alternative indicator to measure the performance of IBs. This paper aims to examine whether zakat ratios can be used as Islamic performance (ISPER) indicators for IBs besides the conventional performance (COPER) indicators.
Design/methodology/approach
The investigation covered a sample of 214 yearly observations of 37 IBs located in Indonesia, Malaysia, Bahrain, Saudi Arabia and the United Arab Emirates for the period 2007–2015. This study used a single-factor congeneric model and confirmatory factor analysis, performed using the AMOS 23.0 software.
Findings
The findings assert that the discriminant validity of multi-bank performance, as measured by ISPER [zakat on assets (ZOA) and zakat on equity (ZOE)] and COPER indicators (return on assets, return on equity and operational efficiency in terms of assets), is very high. Hence, ISPER and COPER measurements are valid, either together to measure the multi-performance of IBs from both the Islamic and conventional perspectives, or independently as each measurement is valid to measure the Islamic and conventional performance if it is used separately.
Research limitations/implications
This paper does not investigate whether the findings are constant across time. This represents one of the limitations of this study.
Practical implications
It is strongly recommended that IBs calculate and disclose zakat ratios, particularly ZOA and ZOE, in their annual reports. Researchers and academicians should use these ratios for measuring the ISPER of IBs, either along with COPER or separately.
Originality/value
Empirical evidence is provided in this paper on the development and validity of zakat ratios as ISPER indicators in the Islamic banking industry. Zakat ratios are suitable indicators that can measure IBs’ performance and achieve the goals of IBs as well as those of Islamic economics. Technically, zakat has a dynamic ability to reflect the profitability of IBs. The more the IBs generate profit, the more they pay zakat. Furthermore, the greater the total assets of IBs, the higher the amount of zakat that they should pay. Thus, zakat ratios can be used as profitability measurements as in the case of tax ratios.
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Daniel Kipkirong Tarus and Fiona Jepkosgei Korir
This paper examines how board structure influences real earnings management and the interaction effect of CEO narcissism on board structure-real earnings management relationship.
Abstract
Purpose
This paper examines how board structure influences real earnings management and the interaction effect of CEO narcissism on board structure-real earnings management relationship.
Design/methodology/approach
The authors used panel data derived from secondary sources from publicly listed firms in Kenya during 2002–2017. Hierarchical regression analysis was used to test the hypotheses.
Findings
The results indicate that board independence, board tenure and size have significant negative effect on real earnings management, while CEO duality positively affects real earnings management. Further, the interaction results show that CEO narcissism moderates the relationship between CEO duality and real earnings management.
Research limitations/implications
The results suggest that real earnings management reduces when boards are independent, large and comprising of long-tenured members. However, when the CEO plays dual role of a chairman, real earnings management increases. The authors also find that when CEOs are narcissists, the monitoring role of the board is compromised.
Originality/value
The study adds value to the understanding of how board structure and CEO narcissism influence the monitoring role of the board among firms listed at Nairobi Securities Exchange.
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Rifat Fariha, Md. Mukarrom Hossain and Ratan Ghosh
This study is designed and directed to analyze the effect of board characteristics and audit committee attributes on the firm performance of publicly listed commercial banks of…
Abstract
Purpose
This study is designed and directed to analyze the effect of board characteristics and audit committee attributes on the firm performance of publicly listed commercial banks of Bangladesh.
Design/methodology/approach
Thirty publicly listed commercial banks of Dhaka Stock Exchange (DSE) have been taken as sample for this study. Data have been collected from annual reports between 2011 and 2017 of the assessed banks. Pooled OLS model has been used for running regression model of this study.
Findings
Board independence has a negative and significant relationship with ROA and Tobin's Q. However, Board Independence has a positive and significant relationship with Stock Return. On the other hand, Board Diversity has a negative and significant relationship with ROA and ROE, which implies inefficiency of diversified board members in the context of Bangladesh. Family duality has a positive and significant relationship with ROA and a negative and significant relationship with Stock return. Board Meeting has a positive and significant relationship with ROA. Audit Committee Size has a negative and significant relationship with Tobins' Q. Independence of audit committee chairman has a negative and significant relationship with Tobin's Q and Stock Returns. Presence of non-executive directors and number of audit meetings have no significant relationship with any of the predicted variables.
Research limitations/implications
Among all variables of the board characteristics, role of independent directors and participation of female directors have conflicting results in this study. This has raised a question about the fair appointment independent directors and their objective view on the board. Female directors' role is not convincing in the context of Bangladesh as most of the commercial banks are family-owned. Policymakers can tighten and supervise the appointment of independent directors to ensure good governance in the banking sector. Moreover, role of audit committee and independence of audit committee chairman have generated conflicting results in terms of market-based performance measure.
Originality/value
Banking sector of Bangladesh experiences huge corruption in the form of excessive NPLs and poor management quality which results in low profit for the firm. This study has explored the problems of management quality and flaws of audit committee which is hampering overall growth of banking industry. Improvement of independent directors' appointment and audit committee formation and reporting will certainly help banking industry of Bangladesh to improve overall performance.
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‘Dual use research’ is research with results that can potentially cause harm as well as benefits. Harm can be to people, animals or the environment. For most research, harms can…
Abstract
‘Dual use research’ is research with results that can potentially cause harm as well as benefits. Harm can be to people, animals or the environment. For most research, harms can be difficult to predict and quantify, so in this sense almost all research could be seen as having dual use potential. This chapter will present a framework for reviewing dual use research by justifying why the responsibility for approving and conducting research does not sit with Research Ethics Committees (RECs) alone. By mapping out the wider research landscape, it will be argued that both responsibility and accountability for dual use research sits on the shoulders of broader governance structures that reflect the philosophical and political aspirations of society as a whole. RECs are certainly still important for identifying potential ‘dual use research of concern’, and perhaps teasing out some of the details that may be hidden within research plans or projects, but in a well-functioning system should never be the sole gate keepers that determine which research should, and should not, be allowed to proceed.
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Giuliana Birindelli, Helen Chiappini and Marco Savioli
This study aims to examine the relationship between female directors and bank risk. In particular, whether such a relationship varies across sound or unsound banks and with or…
Abstract
Purpose
This study aims to examine the relationship between female directors and bank risk. In particular, whether such a relationship varies across sound or unsound banks and with or without a critical mass of female directors is tested.
Design/methodology/approach
Using a sample of 215 listed banks from 40 countries over the period 2008–2016, this study carries out panel data analyses and tests all the model specifications on four different measures of risk (common equity ratio, leverage, NPLs ratio and price volatility).
Findings
The findings show that increasing the number of female directors does not reduce bank risk when banks are unsound. When banks are sound, female directors have a significant and positive role in reducing risk, only until reaching a critical mass of women.
Practical implications
This study provides useful corporate governance indications for policymakers and practitioners. Advantages of gender diversity on boards are recognized especially in sound banks, but increasing the number of women directors beyond the critical mass may not lead to lower risk. In fact, ethical or legal pressures aimed at increasing gender diversity on boards (i.e. soft or hard gender quotas) may cause undesired effects on bank risk, especially if female directors are not chosen on merit and skills. Moreover, gender-balanced boards, namely, with a “dual critical mass,” seem to assure more effective decision-making processes.
Originality/value
This study provides empirical evidence on female board members and risk minimization, differentiating between sound or unsound banks. Furthermore, this study contributes to the literature on the critical mass of women on the board of directors by testing this theory for these two categories of banks.
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Abdalmuttaleb Musleh Alsartawi
This paper aims to investigate the relationship between the composition of Sharīʿah supervisory boards (independence and frequency of meetings) and the performance of Islamic…
Abstract
Purpose
This paper aims to investigate the relationship between the composition of Sharīʿah supervisory boards (independence and frequency of meetings) and the performance of Islamic banks in the Gulf Cooperation Council (GCC) countries.
Design/methodology/approach
The study developed a multiple linear regression model, and data were collected from the annual reports of 48 standalone Islamic banks listed in the GCC countries covering the period between 2013 and 2017.
Findings
The results showed a statistically significant and negative relationship between the composition of the Sharīʿah supervisory boards and the performance of Islamic banks.
Research limitations/implications
As the current study used only one indicator, that is Return on Assets to measure performance, it is recommended to expand the framework of this study, through the addition of market-based performance indicators such as Tobin’s Q.
Practical implications
This study recommends the GCC countries to follow a more proactive Sharīʿah governance model to strengthen their frameworks from both regulatory and non-regulatory aspects.
Originality/value
The study contributes to the Sharīʿah governance and Islamic banking literature relating to the GCC countries as previous studies gave no attention to the composition of Sharīʿah supervisory boards.
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Md. Abdur Rouf and Mamdouh Abdulaziz Saleh Al-Faryan
This study examines, in relation to agency theory, the influence of corporate mechanism on the environmental reporting of banking businesses registered on the Dhaka Stock Exchange…
Abstract
Purpose
This study examines, in relation to agency theory, the influence of corporate mechanism on the environmental reporting of banking businesses registered on the Dhaka Stock Exchange (DSE).
Design/methodology/approach
This study was carried out consuming an example of 150 annual reports from 30 banks for the period 2015–2019. Ordinary least squares (OLS) regression was used to investigate the inspiration of corporate governance on the range of inclusive environmental reporting.
Findings
The outcomes reveal that insider equity, board leadership structure, and presence of female directors are statistically significant, while board size and outside directors are insignificant. Furthermore, the results also indicate that the adoption of environmental disclosure among banking businesses in Bangladesh is extra motivated by an increase in the inside skills and moderately the outside acceptability weights. Additionally, there appears to be a supposed lack of stakeholder pressure for environmental disclosure.
Originality/value
The results show that the range of environmental reporting of banking businesses in Bangladesh is good, at an average of 53.90%. It concludes that corporate governance has a substantial inspiration on the range of environmental reporting of banking businesses in Bangladesh.
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The paper aims to provide a comprehensive investigation of the relationship between corporate governance (CG) structure and firm performance in Chinese listed firms from 2001 to…
Abstract
Purpose
The paper aims to provide a comprehensive investigation of the relationship between corporate governance (CG) structure and firm performance in Chinese listed firms from 2001 to 2015. The authors’ motivation derives from the fact that the CG system in China is different from those in the US, the UK, Germany, Japan and other countries.
Design/methodology/approach
A large unbalanced sample, covering more than 22,700 observations in Chinese listed firms, was used to explore, by means of a system-generalized method-of-moments (GMM) estimator, the relationship between CG structure and firm performance to remove potential sources of endogeneity.
Findings
Results show that Chinese CG structure is endogenously determined by the CG mechanisms investigated: there is no relationship between board size (including independent directors) and firm performance; CEO duality has a significantly negative effect on firm performance; concentration of ownership has a significantly positive influence on firm performance; managerial ownership is negatively correlated with firm performance; state ownership has a significantly positive effect on firm performance; and a supervisory board is positively correlated with firm performance.
Practical implications
The findings provide policymakers and firm managers with useful empirical guidance concerning CG in China.
Originality/value
Few integrative studies have examined the impact of CG structure on firm performance in China. This study adds new empirical evidence that the relation between CG structure and performance in China is endogenous and dynamic when controlling for unobserved heterogeneity, simultaneity, and dynamic endogeneity.
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