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The paper aims to examine the impact of Shari'ah governance quality on environmental, social and governance (ESG) performance in Islamic banks.

The study's sample consists of 66 Islamic banks from 14 countries over 2015–2019. The research uses the Heckman model, which is a two-stage estimation method to obtain unbiased estimates, as ESG scores are only observable for 17 Islamic banks in Eikon Refinitiv database at the time of the analysis.

The analysis shows that Shari'ah governance has a beneficial role to achieve ESG performance. The analysis also shows that enhanced profiles of Shari'ah supervisory boards' (SSB) attributes are more efficient than the operational procedures to promote ESG performance. In addition, the analysis shows that enhanced SSBs' attributes strengthen the bank's corporate governance framework, while sound-designed procedures increase the bank's social activities by emphasizing their roles to ensure Shari'ah compliance. Finally, the analysis sheds light on the failure of Shari'ah governance to promote environmental performance.

The existing databases providing companies' ESG-related information still do not offer sufficient data to conduct an international study with a larger sample of Islamic banks (IBs) having ESG scores for a more extended period.

The research provides policy insights to Islamic banks' stakeholders to promote social and governance performance in the Islamic finance industry through improving Shari'ah governance practices. However, raising environmental awareness is imminent among all actors implicated in the Shari'ah governance processes to help overcome the anthropogenic risks.

The research complements the governance-banks' ESG performance literature by examining the role of Shari'ah governance. The research also extends the literature on Islamic banks' sustainability by pointing to the Shari'ah governance failure to enhance environmental performance and thus achieve Maqasid al-Shariah regarding the environment.

With the advent of Islamic banking, a new species was added to the banking system which was then, only dominated by the conventional banking. Islamic banking expanded in the world within the last decade and as a result, Islamic finance emerged as an alternative to the conventional finance. This created Islamic companies and Islamic financial institutions which operate based on the principles of Shari'ah or Islamic Law. These Islamic corporate bodies, like the conventional corporate bodies do need good governance rules. In other words, they also need a good, sophisticated “Shari'ah Governance Code” which would be based on the principle of Islamic Law. This is mainly because the objective of the conventional and the Islamic Corporate governance is different as conventional corporate governance structure is more focused on the protection of the rights of the stakeholders; while Islamic corporate governance focus on retaining the Islamicity of whole corporation. The objective of this research is, as the title suggests, proposing the reasons why a special governance Code for Shari'ah corporate bodies are needed. This paper would suggest a proper governance structure to the Islamic companies and will also discuss why the conventional corporate governance Codes are unsuitable for the Islamic companies.

This research which is primarily library based, is an exploratory legal research in nature.

In the course of this research, it is found that there is a need to enact a Shari'ah Corporate Governance Code due to the widespread establishment of shari'ah compliant companies in the world. Hence, the authors had discussed the potential content of such a Code in this paper.

This research will complement the knowledge based on shari'ah corporate governance and is targeted to the existing and prospective shari'ah compliant companies.

This purpose of this article is to examine the Shari'ah scholars' perception of the Shari'ah governance system in Islamic financial institutions (IFIs) particularly of its six major areas, namely, issues of Shari'ah governance; internal framework; roles and functions of Shari'ah board; attributes of Shari'ah board members on independence, competency and transparency and confidentiality; operational procedures and assessment of the Shari'ah board's performance.

The study conducted semi-structured interviews with Shari'ah scholars who are members of the Shari'ah boards in various IFIs. All interview questions were generated, structured and arranged in a way that all the data could be analysed easily through a coding and thematic approach.

The study discovers the different points of view demonstrated by the Shari'ah scholars who were interviewed on several issues, and they have also conceded that there are serious gaps and weaknesses prevalent in all the six major areas of Shari'ah governance. This position acknowledges that there are shortcomings and weaknesses to the existing governance framework which need further enhancement and improvement.

The study offers a useful source of information that may provide relevant guidelines to policymakers and practitioners for future development of Shari'ah governance practices in IFIs.

The study provides fresh data and significant information pertaining to the Shari'ah scholars' perspective on the Shari'ah governance system. This analysis of Shari'ah scholars' opinions of the Shari'ah governance system can also serve to enhance the literature on the topic.

The purpose of this paper is to help directors, senior management, and stakeholders of Islamic banks understand sharī‘ah risk, a crucial consideration in the corporate governance of Islamic banks, and its impact on these banks.

This conceptual paper links dispersed insights drawn from the emerging body of sharī‘ah governance literature, and the guidance issued by the Basel Committee on Banking Supervision (BCBS), the Islamic Financial Services Board (IFSB), and the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) with new insights to clarify the sharī‘ah risk that Islamic banks face.

Sharī‘ah risk, an operational risk, poses a credible hazard to Islamic banks and their stakeholders. Possible consequences of sharī‘ah non-compliance include higher costs, financial losses, liquidity problems, bank runs, bank failure, industry smearing and financial instability. This study defines shariah risk, identifies credit, legal, compliance, market, and reputational risk that it may evoke, and categorizes its causes and events.

Future research could empirically test the ideas posited. In this paper claims were substantiated by logic and examples.

The study devises an instrument for assessing sharī‘ah risk, and suggests measures for directors, senior management, and regulators to mitigate this risk.

This is the first study to focus on the implications of sharī‘ah risk, delineate examples of events and incorporate them within the BCBS operational risk causes, and develop a tool for measuring sharī‘ah risk.

The purpose of this study is to examine the extent of audit report lag and its association with governance mechanisms in the Islamic banking institutions in Malaysia.

The extent of audit report lag is defined by the number of days from a company’s financial year-end to the signature date on its audit report. The sample of the study comprises 112 observations of Islamic banking institutions’ financial reports for the period 2008-2014. A balanced panel data analysis is performed to analyse the association between the extent of audit report lag and governance mechanisms.

The findings show that the extent of audit report lag for the sample selected ranges from a minimum period of 7 days to a maximum period of 161 days, and the extent of audit report lag is approximately two months on average. A fixed effects analysis indicates that audit committee expertise and audit committee meeting have significant association with the extent of audit report lag. On the other hand, board independence, audit committee size and Shari’ah board expertise have insignificant association with the extent of audit report lag. In addition, one control variable (Islamic bank size) is found to be significantly associated with longer audit report lag.

The findings provide useful feedback for Malaysian policymakers on the past and current practices of financial reports and of governance mechanisms. The findings of the study would help the policymakers in monitoring the Islamic banking institutions’ compliance with financial reports submission requirements. The policymakers perhaps could relook into governance mechanisms that reduce the extent of audit report lag in the Islamic banking institutions and implement regulations to strengthen them.

Unlike the majority of prior studies that investigated the association between the extent of audit report lag and governance mechanisms, this study provides two contributions. First, to the authors’ knowledge, this study is the first piece of research that examined the association between governance mechanisms and the extent of audit report lag in Islamic banking institutions. Second, the study examined the association of new governance variable, namely, Shari’ah committee expertise which has not been previously examined in the literature of audit report lag.

The purpose of this paper is to understand current Shari'ah governance practices with the purpose of promoting greater understanding of some of the crucial issues and to provide relevant information in guiding the future development of Shari'ah governance system. The paper illustrates the state of Shari'ah governance practices in Malaysia, GCC countries (Kuwait, Bahrain, United Arab Emirates, Qatar and Saudi Arabia) and the UK by highlighting five main elements of good corporate governance that consist of independence, competency, transparency, disclosure and consistency.

Since the availability of secondary data on Shari'ah governance practices is very limited, a detailed survey questionnaire is generated for sourcing primary data from Islamic Financial Institutions (IFIs). The study utilizes descriptive analysis approach in extracting and analyzing the data and factual input derived from the questionnaire feedback.

The survey findings affirm that there are significant differences and diverse Shari'ah governance practices in the case countries. This position acknowledges that there are shortcomings and weaknesses to the existing governance framework which needs further enhancement and improvement.

The paper is a very useful source of information that may provide relevant guidelines in guiding the future development of Shari'ah governance practices in IFIs.

This paper provides fresh data and recent information on the actual Shari'ah governance practices of IFIs in three jurisdictions.

As an essential component of Islamic governance for ensuring religious compliance, Shari’ah annual reports (SARs) play an important role in providing communication between Shari’ah board (SB) members and stakeholders. This paper aims to determine the ethical disclosure in SARs to identify how close the Shari’ah disclosure to the standards set by AAOIFI and also substantive morality of Islam. The research also aims to examine the factors determining disclosure performance.

Two disclosure indices are developed to generate data from the SARs: the AAOIFI standards for Shari’ah governance index for form related approach, an Islamic ethicality augmented index reflecting on substantive morality approach. The sample consists of 41 Islamic banks from 15 different countries for the period of 2007–2014. Sampled 305 SARs were examined through disclosure analysis in line with the two indices developed for this study. The econometric analysis was run to identify the factors determining disclosure performance.

The findings suggest that AAOIFI guidelines have an influence on the level of disclosure, even if Islamic banks have not adopted them. However, the level of disclosure for the ethically augmented index is found to be very limited with reliance on general statements in most of the cases. As part of determining factors, the popularity of Shari’ah scholars is significant for both indices, while the existence of an internal Shari’ah auditing department holds some explanatory power. The adoption of AAOIFI standards at the country level, the regulatory quality and the duration of Sharīʿah-compliance are particularly deterministic factors in terms of complying with AAOIFI standards for SARs.

Although SB is the most crucial division of corporate governance in Islamic banks in terms of securing the “Islamic” identity of these institutions, their most important communication instrument, namely, SAR, has not been explored sufficiently, alongside an insufficient attempt to constitute Islamic corporate governance. Initially, this study attempted to constitute an Islamic corporate governance framework as a theoretical construct, which provides context for the empirical part of the research and this should be considered a novel approach. Second, the empirical part of the research aims to fill the gap observed in the literature such as small sample size and index construction-related matters. This research is conducted with a larger sample size as compared to the available studies in the literature and it has developed two indices for disclosure analysis along with developing an Islamic morality-based index beside an index based on AAOIFI standards.

This paper aims to investigate factors influencing Shari’ah governance disclosure (SGD) in financial institutions.

Using content analysis approach, 46 annual reports published in 2015 by banks and insurance companies were investigated based on a self-constructed disclosure index.

The results show that the average level of voluntary disclosure of Shari’ah governance in Saudi financial institutions is 11.7 per cent, which is lower than expectations Moreover, regression analysis shows that industry type, ownership structure and board composition significantly determine the extent of voluntary disclosure of Shari’ah governance. Local financial institutions which are owned by non-governmental agencies are more likely to disclose voluntarily their Shari’ah governance, in particular from the banking industry.

It also bridges the gap between theory and practice and can be used to practice economic and commercial impact in teaching to influence public policy in research contributing to the body of knowledge and especially for the insurance sector and government.

It provides guidance to the ethical investors and supports them in the decision-making process.

This research extends the investigation of SGD into insurance sector in a country that has a general policy about adhering to Islamic principles. Financial institutions might go beyond the country affirmations to legitimate their identity in response to the society critiques about the issue. Accordingly, internal attributes and strategies of financial institutions may play a significant role in distinguishing its compliance with Islamic principles to respond to the society critiques about financial transactions.

This study aims to investigate the impact of Shari’ah and corporate governance on Islamic banks performance in Asia.

The study uses hand collected data set on Shari’ah and corporate governance variables of 79 Islamic banks of 19 countries of Asia, for the period of 2011-2016. Augmented Mollah et al. (2017) composite corporate governance index into Islamic corporate governance (ICG) index by incorporate Shari’ah board’s (SBs) attributes. Two types of statistical analysis were performed; descriptive statistics, sample t-test and panel random effects regression. The analysis was further sub-sampled by considering the supervisory vs advisory, GCC vs non-GCC and large vs small effects of Shari’ah and corporate boards on Islamic banks performance.

The results of the baseline model reveal that Shari’ah governance-related variables are more influential in determining the financial performance of the Islamic banks. The sub-sampled data findings illustrated some interesting facts. Shari’ah supervisory vs advisory boards regression results show that the ICG index was found significant in both the models. However, when SBs are weak the general board dominates in determining the performance. GCC vs non-GCC results show a relatively good governance in non-GCC countries. While, in case of large vs small Islamic banks, banks having high total assets demonstrates sound governance characteristics.

Independent, large and educated SB can play a significant role in removing the hurdles facing the Islamic banking industry and can also enhance stakeholders’ value.

This study enriches the understanding on Shari’ah governance, corporate governance and financial performance of Islamic banks in Asia.

This paper aims to provide analysis on the state of Islamic finance through critical appraisal on its current form and practices. This paper argues that the current form of Islamic finance practices is due to its legalistic approach and hence requires value-oriented reform. In this regard, Shari’ah governance system can be one of the mechanisms toward such reformation.

This paper uses case study research method and comparative studies of other’s works to develop understanding on the extent of Islamic finance practices. The study utilizes descriptive, comparative and critical analysis approaches in extracting and analyzing the information.

The literature has indicated the growing frustration of scholars and proponents of Islamic economics on the failure of Islamic finance in addressing the real economic and ethical issues beyond the legal realm of Shari’ah compliance. Legalism leads to a narrow understanding and ignores certain dimensions of Islamic finance practices. Considering all factors and through critical observation, this paper argues that the current form of Islamic finance practices is due to its legalistic approach and hence requires value-oriented reform. At this juncture, the paper suggests that Shari’ah governance system can be one of the mechanisms toward such reformation.

This paper provides valuable discussion and fresh and recent information on Islamic finance practices, including Shari’ah governance practices of Islamic financial institutions (IFIs) through case studies. The study shares experience of Malaysia in developing its Islamic finance framework and practices from legalistic toward value-oriented approach.