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1 – 10 of 432Anna Che Azmi, Norazlin Ab Aziz, Normawati Non and Rusnah Muhamad
This paper aims to examine the reasons behind the low level of Sharia-related disclosures, particularly Sharia-compliant companies, to gain an understanding on how these companies…
Abstract
Purpose
This paper aims to examine the reasons behind the low level of Sharia-related disclosures, particularly Sharia-compliant companies, to gain an understanding on how these companies disclose Sharia-related information in their annual reports, and how professional users of these reports search for such disclosures.
Design/methodology/approach
The study is an exploratory research based on structured interviews with individuals involved in the preparation of annual reports of Sharia-compliant companies and professional users of annual reports.
Findings
Most Sharia-compliant companies and professional users interviewed agree that the most relevant Sharia-related information is most commonly understood as the information found in the financial statement and its notes (accounting-related disclosures). Their responses indicate that there is a disjoint between the conventional disclosure practices on corporate social responsibility items and the Sharia-related information.
Research limitations/implications
The idea of full disclosure needs to be further understood from the perspectives of Sharia. This study provides insights into the types of Sharia-related information that are important for disclosure. Future research should focus on examining a larger number of companies and interviewing more professional users from different jurisdictions to generate more knowledge about the nature of Sharia information and its disclosure.
Practical implications
Users of the Sharia screening methods, especially regulators, such as the Securities Commission Malaysia should encourage the disclosure of the required aspects of Sharia in the annual reports of Sharia-compliant companies, as professional users are interested in this type of information.
Originality/value
This study offers insights into the reasons behind low Sharia disclosures in annual reports of Sharia-compliant companies.
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Abdelhafid Benamraoui, Tantawy Moussa and Mostafa Hussien Alsohagy
This paper aims to investigate the disparity and compliance of information disclosures in Islamic banks (IBs). Specifically, the research examines IBs’ compliance with Sharia…
Abstract
Purpose
This paper aims to investigate the disparity and compliance of information disclosures in Islamic banks (IBs). Specifically, the research examines IBs’ compliance with Sharia disclosure requirements.
Design/methodology/approach
To determine the extent of disclosures and compliance with Islamic business principles, content analysis is applied to the annual reports of a sample of IBs from 11 countries. A comprehensive reporting framework has also been developed to assess the transparency and compliance of IBs with Islamic business principles. Institutional theory and core Islamic principles are used to inform the study and its findings.
Findings
The results reveal that IBs demonstrate limited transparency on the key Sharia compliance issues, and there is a wide variation in the level of reporting across the countries studied. Moreover, the authors find that IBs located in the single integrated regulatory framework (RF) countries disclose more information, followed by those located in dual RF countries and then those located in Islamic RF countries.
Originality/value
This study presents a unique and comprehensive framework to assess the areas of Sharia disclosure by IBs and provides a conceptual rationing for the actual level of IBs’ Sharia reporting. This study also fills a significant gap in the literature, as most studies in this field are based on a single-country study. The results are deemed of direct relevance to IBs’ managers, investors, policymakers, regulators and the wider public, particularly in the Muslim world.
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Rania Kamla and Hussain G. Rammal
This study examines social reporting by Islamic banks with special emphasis on themes related to social justice. By using critical theory and “immanent critique”, the study…
Abstract
Purpose
This study examines social reporting by Islamic banks with special emphasis on themes related to social justice. By using critical theory and “immanent critique”, the study attempts to explain and delineate reasons for disclosures and silences in Islamic banks ' annual reports and web sites vis-à-vis social justice.
Design/methodology/approach
The approach taken was a content analysis of annual reports and web sites of 19 Islamic banks.
Findings
Islamic banks ' disclosures emphasise their religious character through claims that they adhere to Sharia ' s teachings. Their disclosures, however, lack specific or detailed information regarding schemes or initiatives vis-à-vis poverty eradication or enhancing social justice.
Research limitations/implications
Limitations associated with content analysis of annual reports and internet web sites apply. This study focuses on Islamic banks ' social roles. Further studies of banks ' social roles in society in general are of interest.
Practical implications
Drawing attention of Islamic banks and other stakeholders to the gap between the rhetorical religious and ethical claims of Islamic banks and their activities (as depicted through their disclosures) opens up the possibility of a positive change in Islamic banks ' actual social roles.
Originality/value
The study fills a gap in both social accounting and Islamic accounting literatures with its emphasis on social justice and poverty eradication. The study contributes to the very scarce literature linking religion (especially Islam), critical theory, social accounting and Islamic accounting. It goes beyond previous research in Islamic accounting literature by exposing contradictions in the Islamic banking industry ' s rhetoric regarding their social role in society.
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Anna Che Azmi and Mohamed Hisham Hanifa
– This study aims to examine whether the financial reporting practices of organisations managing waqf (Islamic endowed trust funds) are Sharia-compliant.
Abstract
Purpose
This study aims to examine whether the financial reporting practices of organisations managing waqf (Islamic endowed trust funds) are Sharia-compliant.
Design/methodology/approach
This paper reports on a case study of two Islamic-based organisations that manage waqf. The financial statements of these organisations are analysed using content analysis to assess their compliance with the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) Sharia Standard No. 33 (SS 33) on waqf.
Findings
The authors found that both Islamic-based organisations use different sets of accounting procedures and practices, but that these accounting practices do not contradict the Sharia requirements prescribed in the SS 33 on waqf. However, the SS 33 on waqf requires that waqf funds to be utilised as stipulated by the waqif (donor) and that the accounting practices of both organisations do not adequately address this disclosure requirement. This study also found that the existing accounting practices adopted by organisations that manage waqf need to incorporate more disclosure on their Sharia-based financing and their investment of waqf funds.
Research limitations/implications
This study found that the AAOIFI’s SS33 on waqf is a useful guide for identifying the gap between Sharia principles and conventional financial reporting practices for non-profit organisations, and that there are aspects of Sharia-based disclosure practices that are not adequately implemented in financial reporting practices of institutions managing waqf.
Practical implications
This study proposes two essential Sharia-based disclosure practices for Islamic-based organisations that manage Islamic-based funds such as waqf. These two aspects are the disclosure on whether waqf funds are adequately utilised as stipulated by the waqif (donor) and what modifications to their existing financial reporting of their Sharia-based financing and investments are required to comply with the unique nature of waqf.
Originality/value
This paper fulfils an identified need to study how Sharia principles can be incorporated into the financial reporting practices of organisations that manage Islamic-based funds such as waqf.
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Sherif El-Halaby and Khaled Hussainey
The authors explore the level and determinants of compliance with Accounting and Auditing Organization for Islamic Financial Institution’s (AAOIFI) financial and governance…
Abstract
Purpose
The authors explore the level and determinants of compliance with Accounting and Auditing Organization for Islamic Financial Institution’s (AAOIFI) financial and governance standards by Islamic banks (IBs).
Design/methodology/approach
The sample consists of 43 IBs across eight countries. The authors use ordinary least squares regression analyses to examine the impact of bank-specific characteristics and corporate governance (CG) mechanisms concerned with Board of Directors (BOD) and Sharia Supervisory Board (SSB) on the levels of compliance with AAOIFI standards.
Findings
The paper finds that the average compliance level based on AAOIFI standards concerning the SSB is 68 per cent; corporate social responsibility (CSR) is 27 per cent; and presentation of financial statements (FSs) is 73 per cent. The aggregate disclosure based on the three indices is 56 per cent. The analysis also shows that size, existing Sharia-auditing department, age and CG of SSB are the main determinants of compliance levels.
Originality/value
The determinants of compliance with AAOIFI standards for IBs around the world have not been explored before, and therefore, this paper is the first of its kind to this issue.
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Peni Nugraheni and Erlinda Nur Khasanah
The purpose of this study is to discuss the extent to which Indonesian Islamic banks (IBs) disclose corporate social responsibility (CSR) according to the Accounting and Auditing…
Abstract
Purpose
The purpose of this study is to discuss the extent to which Indonesian Islamic banks (IBs) disclose corporate social responsibility (CSR) according to the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) index. It also empirically examines the determinants of CSR disclosure in Indonesian IBs, based on disclosure from AAOIFI index, which is based on Islamic principles.
Design/methodology/approach
The determinant used in this paper is the corporate governance (CG) mechanism, which focuses on the board of commissioners (BOC) and Sharia Supervisory Board (SSB) and their characteristics. The paper uses multiple regression analysis to examine the influence of these variables on CSR.
Findings
The results indicate that the level of CSR disclosure of IBs measured by the AAOIFI index continues to be low. The statistical results reveal that CSR disclosure has an insignificant relationship with BOC size and SSB qualifications, while the other results show a negative association between the composition of independent BOCs and CSR disclosure, and the frequency of BOC and SSB meeting has a positive effect on this.
Research limitations/implications
The study focuses on Indonesian IBs. The variables of the CG mechanism are limited to the BOC and SSB, while the BOC exists only in countries that adopt two-tier boards.
Practical implications
IBs should provide a wider range of information to be disclosed. The government should establish specific items that need to be disclosed by IBs, considering there are no specific CSR disclosure regulations for IBs in Indonesia.
Originality/value
This study uses the AAOIFI index, which may be a suitable measure of CSR in IBs. The study also analyzes why certain items in the index have a high disclosure level and others do not.
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Sherif El-Halaby, Khaled Hussainey and Heba Abou-El-Sood
The purpose of this paper is to examine the effect of sharia, social and financial disclosure on stakeholders’ loyalty towards Islamic banks (IBs). The paper also aims to examine…
Abstract
Purpose
The purpose of this paper is to examine the effect of sharia, social and financial disclosure on stakeholders’ loyalty towards Islamic banks (IBs). The paper also aims to examine the extent to which trust and satisfaction mediate this effect.
Design/methodology/approach
It uses data collected from 600 respondents to survey questionnaires disseminated to stakeholders from 15 countries dealing with IBs. Structural equation modelling is adopted with a partial least square approach.
Findings
The results indicate that there is a significant impact of disclosure on stakeholders’ trust, satisfaction, and loyalty. The results also indicate that there is a partial mediating effect of trust and satisfaction in the relationship between disclosure and loyalty. This paper is one of the first studies examining the effect of disclosure on stakeholders’ loyalty. The authors provide novel findings, which have theoretical and practical implications for disclosure in IBs and their relationship with stakeholders.
Originality/value
The analysis offers a novel contribution to the Islamic banking literature by offering the first evidence on the impact of disclosure on stakeholders’ trust, satisfaction, and loyalty.
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Sherif El-Halaby, Sameh Aboul-Dahab and Nuha Bin Qoud
This paper aims to systematically review the existing studies for Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) standards which include…
Abstract
Purpose
This paper aims to systematically review the existing studies for Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) standards which include different tracks of researches and then identify the gaps to propose opportunities for future research.
Design/methodology/approach
By adopting a systematic literature review approach, 46 papers that were published between 2000 and 2020 from 23 journals concerned with AAOIFI were selected for review and analysis.
Findings
The authors combine electronic searches to identify relevant studies using keywords such as “AAOIFI” or and “Islamic standards.” In light of the existing studies’ limitations, this paper derives and summarizes five leading future research tracks: identifies the research gaps in AAOIFI and then suggests that AAOIFI still requires more empirical analyses; identifies the alternative analytical methods as meta-analysis; identifies additional measurements for macro and microeconomics factors; identifies recent tracks as corresponding to Covid-19 pandemic; and future studies should consider the role of central banks and positive criticism for AAOIFI.
Practical implications
This analysis address the literature gaps on measuring compliance, determinants and consequences of AAOIFI adoption as this study serves as a guide for the researchers, regulators and Islamic financial institutions in research associated with this area. The findings would support AAOIFI, regulators and related authorities across jurisdictions with suggestions on improving the current AAOIFI practices.
Originality/value
This literature review is a historical record and guidance for researchers who seek to examine and explore several questions about AAOIFI. To the best of the authors’ knowledge, this is the first paper that applies systematic literature review over AAOIFI research field.
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Omar Kachkar and Mustafa K. Yilmaz
This study aims to examine diversity in the composition of Shariah supervisory boards (SSBs) of Islamic banks (IBs). It investigates diversity from two perspectives: existing…
Abstract
Purpose
This study aims to examine diversity in the composition of Shariah supervisory boards (SSBs) of Islamic banks (IBs). It investigates diversity from two perspectives: existing composition of SSBs and the regulatory frameworks and standards of selected Organisation of Islamic Cooperation countries. Diversity characteristics include education, nationality, gender and age.
Design/methodology/approach
A list of all full-fledged Islamic commercial banks (FFICBs) globally has been carefully prepared and confirmed. Conventional banks with Islamic windows, non-commercial banks, takaful companies and other Islamic financial institutions are excluded. The available profiles of 428 SSB members have been scrutinised and analysed. These board members occupy 522 SSB positions in 238 FFICBs operating in 52 countries around the globe. From the regulatory perspective, 12 national and international Shariah governance frameworks and standards have been examined.
Findings
Findings of this paper indicate various levels of diversity in SSBs of the reviewed IBs. The level of diversity in educational background and in the nationality of SSBs can be described as generally acceptable. However, a lack of diversity in gender and age among SSB members is evidently observed in IBs. While the lack of age diversity in SSBs may be relatively justified as a common trend in the composition of corporate boards, SSBs of IBs are seriously lagging behind in gender diversity. On the regulatory level, this study concluded that provisions on diversity as a requirement in SSBs are almost non-existent in the existing regulatory frameworks and standards.
Research limitations/implications
The major limitation of this study is the lack of available information on the SSB members.
Practical implications
This paper provides insights for IBs and policymakers concerned with the corporate governance of IBs and all Islamic financial institutions. First, it offers an excellent bird’s-eye view of the status of diversity in SSBs of IBs. Second, it motivates policymakers and standard-setting bodies to ensure, through the relevant regulatory frameworks, adequate levels of diversity in the composition of SSBs. Diversity in SSBs of IBs and Islamic financial institutions should be given special emphasis, not only in boards and top management positions but also in the workplace. This is of profound significance to the reputation of Islamic finance industry which has been recently under mounting pressure to translate the rhetoric about the Islamic finance industry being ethical, fair, just, equitable and inclusive into genuine implementations.
Originality/value
To the best of the authors’ knowledge, this study is the first of its kind to examine the diversity of SSB members from the regulatory as well as from the implementation perspective.
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Md. Abdul Kaium Masud, Mohammad Sharif Hossain, Mahfuzur Rahman, Mohammad Ashraful Ferdous Chowdhury and Mohammed Mizanur Rahman
Corporate corruption reporting (CCR) is an emerging issue of the corporation for measuring transparency, integrity and accountability to the stakeholders and society. The purpose…
Abstract
Purpose
Corporate corruption reporting (CCR) is an emerging issue of the corporation for measuring transparency, integrity and accountability to the stakeholders and society. The purpose of this paper is to examine the role of CCR and financial management responsibility regarding the issue of corruption control.
Design/methodology/approach
To explore the influences of corruption disclosure, this study considers the keywords-based content analysis of the listed financial firms of the Dhaka Stock Exchange in Bangladesh for 2012–2016. The research considers stakeholders and theoretical legitimacy lens for discussing corporate corruption disclosure. This study identified 143 self-driven keywords by classifying, analyzing and selecting the appropriate large set of keywords from the prior literature. This study examines 247 firm-year observations of all financial firms in Bangladesh using secondary data sources.
Findings
The results of the hierarchical regression analysis report that financial firms following Sharia principles have a negative and significant association with CCR, while Big4 has a positive and significant influence. Moreover, the interaction effect of Big4 on the relationship between Sharia principles and CCR is negative and insignificant. The findings reported that Islamic financial firms disclose less corruption information than conventional financial firms in Bangladesh.
Practical implications
This study findings are expected to significantly impact corporate management and policymakers of developing and highly corrupted economies to enhance corporate accountability, transparency and reputation. The regulatory body can consider the findings to promulgate anti-corruption reporting rules and regulations.
Originality/value
The authors believe the theoretical lens used to support the method and findings of this paper are unique and novel.
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