The objective of this study is twofold: to examine the patterns that govern social reporting with reference to an Islamic framework and to identify the moral legitimacy factors that influence them. We select 146 publicly listed Sharia‐compliant companies and classify the disclosures in their annual reports according to an Islamic framework that categorises items as either Required, Expected or Desired to indicate the degree of importance each item carries from an Islamic perspective. Based on this framework, we then analyse moral legitimacy factors, specifically the type of Sharia screening body and the proportion of Muslims in the population, that may influence the prioritisation of the different categories of social reporting. We find that disclosures that fall into the Required category of our framework—especially those that relate to companies’ involvement in “haram” activities (activities not permissible in Islam)—are still few among the companies studied. Our research also reveals that both moral legitimacy factors under investigation influence the three categories of social reporting, although in different ways. This research contributes to the existing literature by empirically examining how organisations prioritise their disclosure of virtues and the moral legitimacy factors that influence that prioritisation.
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.
Purpose This paper aims to examine the challenges of applying Shariah law in the equity market by engaging in narratives with Shariah screeners and advisors on how they conduct their screening responsibilities despite the low levels of Islamic-related disclosure made by companies in their annual reports. The Shariah screening processes in three countries with different Islamic equity markets – Malaysia, Saudi Arabia and the United Kingdom – are examined. Design/methodology/approach The authors interview 19 Shariah screeners and advisors in three different Islamic equity markets – Malaysia, Saudi Arabia and the United Kingdom. Findings Overall, the findings in this study show that despite the differences in the regulatory environment, companies still make Islamic-related disclosures on a voluntary basis. However, the lack of Islamic-related disclosures presents various challenges for Shariah screeners, particularly when identifying the operations that constitute the main activity of the company in screening for prohibited activities. Research limitations/implications Shariah screeners can play an important role in increasing the level of understanding and perhaps increasing Islamic-related disclosures in annual reports by establishing a set of effective guidelines or practices for Shariah screeners to use when screening companies for their Shariah-compliant status. Originality/value The paper identifies a gap in the Shariah screening literature and voluntary Islamic disclosures literature. By identifying this gap, the paper highlights the challenges Shariah screeners and advisors face because of the low level of Islamic-related disclosures.
Purpose This paper aims to examine if Malaysian public listed companies have expressed any specific sentiment(s) when publishing their financial performance during the COVID-19 pandemic. Design/methodology/approach The disclosed sentiments contained in the management discussion and analysis section of the companies’ annual reports were extracted by means of computer-automated textual analysis through the linguistic inquiry and word counts and the Loughran–McDonald Financial Sentiment Dictionary. Next, a correlation analysis was conducted. Finally, a qualitative content analysis (QCA) was conducted to confirm these sentiments. Findings The analysis shows that companies adopted various tones of sentiments when communicating with their stakeholders. Most companies used negative sentiments to voice their concerns about how the COVID-19 pandemic has impacted upon their business operations. Only a few companies reflected positive sentiments, whilst those that experienced operating losses also expressed uncertainty. Research limitations/implications This study may assist either the regulators or accounting bodies to introduce a reporting framework that public companies can adopt during natural hazards. It also provides useful insights to (potential) investors to enable them to better understand the business landscape. For future research, the same study could be conducted on more countries so that their experiences can be used to better understand the business phenomenon from a global perspective. Originality/value This study is one of few studies to adopt automated textual analysis and QCA to examine the exhibited sentiments when public companies reported their financial performance during the COVID-19 pandemic.
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