The Relationship between Islamic Corporate Governance, Human Governance, Usage of Information Technology and Sustainability Reporting: Comparison of Shariah Compliant Companies in Malaysia and Indonesia (original) (raw)

The Relationship between Islamic Corporate Governance, Human Governance and Sustainability Reporting of Shariah Compliant Companies in Malaysia

International Journal of Academic Research in Accounting, Finance and Management Sciences

This study aims to evaluate the relationship between Islamic corporate governance, human governance and sustainability reporting by investigating Shariah compliant companies in Malaysia. This is very significance as to ensure that the corporate governance mechanism will lead the organization to do more sustainability practises when there is disclosure on Islamic corporate governance and human governance. Human governance is measured by job experience of Board of Directors (BOD), education background of BOD, education level of BOD, age of BOD, gender diversity of BOD, level of integrity, the quantity of training attended by BOD and internal control quality. This study investigates the relationships between sustainability reporting, which comprises economic, environmental, social, Islamic corporate governance and human governance. The study has been using quantitative analyses based on a total of 68 Shariah compliant companies' annual reports for the year ended 2019.Descriptive and multiple regression analyses were used to analyse the data. The study found that, education background of BOD, education level of BOD, age of BOD, level of integrity and internal control quality were significantly related to sustainability reporting. However, job experience of BOD, quantity of training attended by BOD and gender diversity of BOD were found not to be significantly related to sustainability reporting. Islamic corporate governance was also found not to be significantly related to sustainability reporting. Shariah companies should focus on having BOD diversity in terms of age, education level and education background. There should also be an internal quality control system and an ethical culture in place to improve its sustainability reporting. Further, this study contributes to the discussion of Islamic corporate governance, human governance and sustainability reporting. The findings can be used to identify the necessary mechanisms that should be enhanced to strengthen the practice of sustainability reporting. Hence, future research could include more items in Islamic corporate governance on the sustainability practises.

Sustainability Reporting Disclosure in Islamic Corporates: Do Human Governance, Corporate Governance, and IT Usage Matter?

Sustainability

In developing countries, particularly South Asia, there is scarce research on corporate governance and sustainability reporting disclosure. This study considers several insightful theories, including Stakeholder Theory, Agency Theory, and the TOE Framework, to understand the relationships and drivers of sustainability reporting. The study examines Indonesian Islamic corporates using data from the ISSI (Indonesia Shariah Stock Index). We gathered annual reports and sustainability reports from the ISSI database for the year 2019. The study investigates how human governance (HG), Islamic corporate governance (ICG), and information technology usage (ITU) are related to sustainability reporting disclosure (SR). The findings showed that the sustainability reporting disclosure was significantly influenced by human governance and Islamic corporate governance with firm size and leverage. Furthermore, the research showed that profitability was not significantly related to sustainability repor...

Environmental Management Accounting, Islamic Social Reporting, and Corporate Governance Mechanism on Sharia-Approved Companies in Indonesia

International Journal of Financial Research

Issues of Islamic Social Reporting among Sharia-approved companies in Indonesia are still rare. Sharia-approved companies must comply with the sharia principles that have been approved by the Sharia Fatwa Council and the Financial Services Authority. The aim of this study is to obtain empirical evidence conformity of corporate environmental management accounting practices with the concept of Islamic Social Reporting. This study will also find evidence the effect of company's monitoring function to implementing Islamic Social Reporting.The practice of corporate environmental management accounting is an interesting and important study because environmental issues are a complex issue. For Sharia-approved companies, the commitment to comply with sharia principles in environmental activities provides assurance to its specific investor that the business activities run according to sharia principles. The commitment to prevent sharia-based business activities is stronger when the compan...

Corporate governance attributes as determinants of the Islamic Social Reporting of Shariah-compliant companies in Malaysia

2018

An increase in the number of Shariah-compliant companies in Malaysia has greatly contributed to stabilising the Islamic Capital Market (ICM). The aim of this study is to examine the nature and extent of Islamic Social Reporting (ISR) practices among Shariah-compliant companies listed on the ACE Market in Malaysia. The study also examines the potential existence of a relationship between corporate governance attributes and ISR. The study focuses on four attributes of corporate governance: Shariah supervisory board size, Audit quality, Audit committee and Muslim ownership. A sample was selected comprising 53 Shariah-compliant companies listed on the ACE Market of Bursa Malaysia during the three-year period of 2015–2017. The study uses content analysis, with ISR coded according to a modified Islamic Social Disclosure Index. The results show significant relationships between the corporate governance attributes of board size, audit quality and audit committee, and ISR. This may reflect t...

The Effect of Corporate Governance Mechanism, Company Size, Financial Performance, and Environmental Performance On Islamic Social Reporting Disclosure

Ekonomis: Journal of Economics and Business

The purpose of this study was to determine the effect of the size of the board of commissioners, the independence of the board of commissioners, the audit committee, managerial ownership, institutional ownership, company size, profitability, and environmental performance on the disclosure of Islamic social reporting in companies listed on the Indonesian Sharia Stock Index. The population of this study consisted of all companies listed on the Indonesian Sharia Stock Index in the period 2014 – 2019. The total sample used in this study was 60 companies. Then, the data were tested using the multiple regression method. The results showed that the size of the board of commissioners, audit committee, firm size, profitability affect the disclosure of Islamic social reporting, while the independent variables of the board of commissioners, managerial ownership, institutional ownership, and environmental performance do not affect the disclosure of Islamic social reporting.

Sustainability-Disclosures and Financial Performance: Shariah Compliant vs Non-Shariah- Compliant Indonesian Firms

Journal of Islamic Monetary Economics and Finance

We investigate the impact of sustainability-performance disclosure (SPD) on firmperformance on a cross-industry sample of 71 firms over the period 2011-2018. Wealso compare the relationship between shariah-compliant firms (SCFs) and non-shariah-compliant firms(NSCF). To control for possible issues of unobservedheterogeneity, endogeneity and autocorrelation, we use the system generalizedmethod of moments approach. We found that disclosure of sustainability performanceincreases a firm’s financial performance. Firms which disclose information on theirsustainability practices were found to have higher earnings on assets and equity,which clearly supports the argument of information asymmetry. In the comparison ofshariah-compliant and non-shariah-compliant firms, it was found that SCFs are at anadvantage by being shariah compliant and that disclosure of sustainabilityperformance increases the financial performance of such firms, whereas for non-shariah-compliant firms, the impact was foun...

Corporate Governance and Islamic Social Responsibility Disclosure In Kuwaiti Shariah Compliant Financial Institutions

Studies in Business and Economics, 2012

This study examines the relationship between corporate governance characteristics and the extent of Islamic social responsibility disclosure in Kuwait. The annual reports of 40 Shariah-compliant financial institutions listed on the Kuwait Stock Exchange in 2010 are examined. Four major corporate governance characteristics are investigated: 1) the existence of a Shariah supervisory board; 2) the number of board members; 3) the proportion of non-executive directors to the total number of directors on the board; and 4) role duality. The extent of Islamic social responsibility disclosure is measured using a self-constructed index. The index consists of 46 Islamic information items. Multivariate regression analyses are used to examine the relationships between these characteristics and the level of Islamic social responsibility disclosure. The results show that Shariah-compliant financial institutions disclosed 18% on average of the possible voluntary disclosure items. The findings repor...

Determinants of Good Corporate Governance, Company Characteristics, and Environmental Performance on Islamic Social Reporting (Isr) Disclosure

Kompartemen : Jurnal Ilmiah Akuntansi

The aim of this research is to analysis the influence of Good Corporate Governance, Company Characteristics, and Enviromental Performance on the disclosure of Islamic Social Reporting (ISR). The population of this research is the companies registered in Jakarta Islamic Index (JII) on year period 2015-2019. The sampling technique used was purposive sampling. The number of samples in this study were 45 samples. The data analysis techniques used were multiple linear regression, which were processed through SPSS version 25. The results showed that Good Corporate Governance as measured by Board of Commissioner Size and Public Ownership have a significant positive effect os ISR disclosure. Company Characteristics as measured by age of company had a significant effect while Type of Industry had not significant effect and Enviromental Performance had a significant effect. The result also proves that a company that stands in the community could not be separated from the social contract relat...

Sustainability Disclosure among Malaysian Shari'ah-Compliant listed Companies: Web Reporting

Issues in Social and Environmental …, 2012

This paper advances previous research of sustainability disclosure by focusing on information disclosed in the companies' web site rather than through annual reports. Despite looking at the listed companies in general, this study attempts to consider the practice of disclosing sustainability information in the Malaysian Shari'ah-Compliant listed companies, which represented 87% of the total listed securities or 64.3% of the market capitalization on Bursa Malaysia web site. This study used Islamicity Disclosure Index consists of Shari'ah Compliance Indicator, Corporate Governance Index and Social/Environmental Index, and the data is analysed using a content analysis. The results of the study suggest that the sustainability disclosure by Malaysian Shari'ah-compliant listed companies fall significantly on corporate governance index themes, followed by social/environmental index themes. However, Malaysian Shari'ah-compliant listed companies did not clearly disclose the items under Shari'ah compliance index. Contrary to our expectation, most of the companies disclose the items measured in the annual reports linked to the companies' web site and are thus not fully in the web site.

Islamic governance, sharia supervisory board, environmental performance, and Islamic social reporting: Evidence from Indonesia

JIFA (Journal of Islamic Finance and Accounting)

Islamic social reporting has been recognised as a major concern in Islamic accounting research in Indonesia. However, research on this issue still remains more paucity of evidence. The purpose of this study was to determine the effect of Islamic governance scores, sharia supervisory board education, cross membership of sharia supervisory boards, and environmental performance on Islamic social reporting. The population used in this study is Sharia Commercial Banks listed on the Financial Services Authoruty (OJK) during 2008-2020. The sampling technique used was purposive to obtain a sample of 150 companies that met the criteria. This study employed multiple regression analysis using the SPSS program to analyze the data. The results of this study showed that Islamic governance score and environmental performance had a positive effect on the disclosure of Islamic social reporting. On the other hand, the result further indicated that the education of the sharia supervisory board and cro...