PurposeThe purpose of this paper is to explore whether any discrepancy exists between the corporate social activities disclosed in the annual reports of Islamic banks and the corporate social responsibility (CSR) disclosure index which has been developed based on the Islamic business ethics framework.Design/methodology/approachThis paper reports on a survey of annual reports of seven Islamic banks using the method of content analysis to measure the volume of CSR disclosure.FindingsThe results show the overall mean CSR disclosure index of one Islamic bank out of seven to be above average and the issues of CSR are not of major concern for most Islamic banks.Research limitations/implicationsCSR disclosure in the Islamic banks is experimental and could be explored in greater depth in future studies.Practical implicationsThe findings have important implications for academics and researchers, as they pave the ways for further investigation. The results also have important implication for Accounting and Auditing Organisation for Islamic Financial Institutions in developing a CSR reporting standard if Islamic banks are to enhance their image and reputation globally, as well as to remain competitive.Originality/valueThe paper contributes to the growing debate on CSR in ethical perspective and key underlying issues associated with the emergence of new disclosure practices for Islamic financial institutions. Through this paper, new visibilities explored, and competing dilemmas opened up.
Purpose -The purpose of this paper is to formalize a general equilibrium circular causation relationship model in the Islamic economic framework between wealth tax (Zakat), Islamic bank and the real economy. Design/methodology/approach -Mathematical modeling along with explanation. Findings -The integrative interrelationships can be formalized only under the assumption of unity of knowledge as derived from the foundation of oneness of the divine law (shari'ah) according to the Qur'an, Prophetic traditions (Sunnah) and social discourse. Research limitations/implications -A future work would be to empirically estimate the general equilibrium model. Practical implications -A guidance to Islamic banks on the constructive utilization of Zakat fund for productive transformation in the real economy. Originality/value -A general equilibrium model guided by the episteme of oneness of the divine law at work, hence unity of knowledge at work in real problems of ethics and economics according to the Islamic worldview.
In a capitalist system apt annual report that includes financial statement is assumed to provide sound information concerning a given company. The annual report offers a background to a company, its financial position, operational results, and its performance According to radical economics, a financial statement serves the interests of capitalists (Belkaoui, 1984) Annual reports are also value free and are not concerned with issues such as justice or ethics. Indeed, current trends in accounting have raised some questions concerning the paradigm of traditional accounting theory and especially its bias concerning capitalist interests. The emergence of Employee Reporting Value Added Accounting, Socio-Economic Accounting, and Environmental Accounting to name just a few, is evidences of the shortcomings of the capitalistic accounting system in establishing both just and fair principles among company stakeholders This has therefore led to a demand for a new approach towards accounting disclosure including among others things: a clear account of how a company treats its employees, society, the environment and the beliefs of employees. Even though the standard formulated by AAOIFI (1998) based on capitalistic accounting, are still in a theoretical stage of development they can be used as a starting point that may help lead to an improved set of disclosure criteria that can be used by an Islamic bank or organization. This paper will discuss the empirical evidence derived from one such Islamic organization. Bank Muamalat Indonesia, has compiled information using capitalistic accounting standards so as to clarify its financial position and results of operations to stakeholders. It is hypothesized though, that the current disclosures system employed gives no indication of justness or fairness and so is incompatible with Islamic value. The paper argues Muslim researcher should aim to move from utilizing capitalistic practice primarily concerned with the disclosure, of 'financial indicators and towards a system that also consider justice, fairness, and ethical practices.
Purpose -The purpose of this paper is to explain how to reduce transaction cost in corporate governance by subjecting it institutionally to ethics and values of interactive and consensual decision making with transparency gained from participation between managers and shareholders/stakeholders and the community at large. This is an epistemological problem in the Islamic approach to corporate governance. The paper brings these out in technical language and methodology.Design/methodology/approach -An analytical epistemological and comparative study between mainstream and Islamic conceptions in corporate governance is used to develop the idea mentioned above. The analytical model used is of an ethico-economic general equilibrium type with learning variables. Findings -The Islamic theory of corporate governance under the rubric of its epistemology of unity of knowledge treated within a systems approach is found to reduce transaction cost and produce better management decisions.Research limitations/implications -The paper is mostly theoretical in nature but carries quantitative facts on the limitations of existing corporate governance practice at the accountancy level in the global scene.Practical implications -The adoption of institutional modes to generate interactive, integrative and evolutionary frameworks of corporate decision making is derived from the content of the paper. Recent global incidents with WorldCom and Enron are cited to show how corporate governance has failed as an effective means of reducing the immense transaction costs that were engendered by the failure of these mega corporations.Originality/value -The paper conveys an original idea that has not been taken up elsewhere. It reflects the systems approach to the study of behavior in a corporate setting within the epistemology of systemic unity of knowledge. Besides, in the Islamic comparison that the paper undertakes in contradistinction to the mainstream approach, the methodology of systemic unity of knowledge conveys an altogether new way of studying corporate governance in the related new institutional framework.
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