Corporate governance and compliance with AAOIFI governance standards by Islamic banks

Mnif, Yosra; Tahari, Marwa

doi:10.1108/imefm-03-2019-0123

Cited by 11 publications

(14 citation statements)

References 63 publications

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“…H10 is supported. Several past studies also supported this finding (see Ahmed Haji 2015;Goebel 2019;Mnif & Tahari 2020) which indicates audit committee members with accounting related knowledge will give values to Islamic banks since they able to provide a practical advice to management who may not so wellversed with accounting or financial related knowledge. The proportion of independent non-executive directors in the board; B_EXPERT: The proportion of board members with accounting, finance or Islamic finance background or related experience; AC_SIZE: Total number of audit committee; AC_MEETING: Number of meeting conducted by the audit committee for the year; AC_GENDER: The proportion of women in the audit committee team.…”

Section: Results and Findingsmentioning

confidence: 66%

“…Agency theory and prior literature suggests that audit committee size affects audit effectiveness in the sense of a larger board is more likely to have more knowledge and skills (see Romero et al 2021;Dalwai & Mohammadi 2020;Harun et al 2020), but without an appropriate level of expertise among the board members, it will be a cost instead of benefit to the firm. Mnif and Tahari (2020) also believed that lack of right expertise among the audit committee members will leads to a failure of a board to exercise its oversight duty. Specifically, they highlight the importance of sound knowledge among audit committee members as it would enable the board to better understand on the nature of industry and related disclosure issues with better complied with financial reporting standards.…”

Section: Audit Committee Sizementioning

confidence: 99%

“…,Belal et al (2018),Buallay et al (2019) Harun et al 2020Dalwai & Mohammadi 2020;Mnif & Tahari 2020). In developing the disclosure items, the existing and grounded studies(Li et al 2012; Ahmed Haji & TABLE I.…”

mentioning

confidence: 99%

See 2 more Smart Citations

Intellectual Capital Disclosure and Corporate Governance: Empirical Evidence From a Cross Country That Offering Islamic Bank Services

2022

AJAG

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Intellectual capital is imperative for Islamic banks given their unique characterisctiscs in that they offer innovative Shariah-based solutions to the modern financial problems. This study therefore examined the influence of corporate goverance on intellectual capital disclosure (ICD) practices of Islamic banks. Data from a sample of 33 Islamic banks for the period 2012 to 2018 were collected. A self-developed ICD checklist was used to measure the extent of IC information disclosed in the annual report. This paper also examines the relationship between ICD practices and several corporate governance components which includes board size, board meeting, board independence, board gender, board expertise, audit committee size, audit committee meeting, audit committee independence, audit committee gender and audit committee expertise. Our results revealed that having an effective corporate governance structure is essential, as it is able to influence the ICD practices of Islamic banks. However, instead of focusing on the role of the board, our paper highlights the importance role of audit committee functions. Specifically, the results suggest that larger or reasonable audit committee size tends to have varied skills and expertise among the audit committee members, resulting in more information by allowing for greater diversity of backgrounds and viewpoints. Gender diversity in audit members' profiles will also encourage the board to be more effective and creative in generating innovative ideas, hence more IC will be created. This study adds to the empirical studies on corporate governance from Islamic banks' perspectives covering several countries. It also introduce the Shariah capital, as one of components in the IC index to respond to the peculiarities of Islamic on intellectual capital.

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Section: Results and Findingsmentioning

confidence: 66%

Section: Audit Committee Sizementioning

confidence: 99%

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Intellectual Capital Disclosure and Corporate Governance: Empirical Evidence From a Cross Country That Offering Islamic Bank Services

2022

AJAG

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“…According to Pincus et al (1989), the key role of the audit committee is to assist the board of directors to oversee a company's financial reporting policy. Mnif and Tahari (2020) studied the effect of corporate governance characteristics on compliance with the AAOIFI governance standards disclosure for 54 Islamic banks adopting the AAOIFI in Bahrain, Qatar, Jordan, Oman, Yemen, Syria, Sudan and Palestine from 2009 to 2017. They found a positive association between compliance with the AAOIFI governance disclosure guidelines and audit committee independence.…”

Section: The Presence Of Women On the Boardmentioning

confidence: 99%

Compliance and Determinants of the AAOIFI Financial Standards: Evidence from the MENA Region

Bechihi¹,

Boumediene²,

Nafti³

2021

APMAJ

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This paper analyses the level of compliance of financial disclosure with accounting standards of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and its determinants in Middle Eastern and North African (MENA) Islamic banks. Based on 40 Islamic banks in seven MENA countries over the period 2010-2016, the authors used a disclosure index to measure the compliance level and the effect of governance characteristics and the Sharia Board on the extent of compliance with the AAOIFI accounting standards. Results show a high level of compliance (67%). Using the Feasible General Least Square Regression, we found that the presence of women on the board of directors, the reputation of the Sharia Board, and the cross membership of Sharia Board members are key determinants of compliance. While independence of board of directors is significantly associated to reduced financial disclosure. The research contributes to the literature on accounting and the Islamic banking sector. These findings will be useful for regulatory authorities to better- understand the accounting disclosure practices of Islamic banks. Although findings are encouraging, the sample is limited only to banks. Future researches could deal with a larger sample and review other disclosure items to ensure compliance with the AAOIFI standards. Few empirical studies have explored the determinants of compliance with the AAOIFI standards for Islamic banks in MENA countries. Therefore, this work complements and enriches the research in the field in the MENA region. Keywords: financial disclosure, AAOIFI compliance, Islamic banks, governance characteristics, Sharia board

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“…For improving the governance standards of IFIs, organizations such as AAOIFI and IFSB develop standards, which incorporate Sharīʿah-compliance principles (Mnif and Tahari, 2020). Organizations such as AAOIFI and IFSB are promoting standardization within the global Islamic financial industry, which contributes to better Sharīʿah-compliance and profitability for the IFIs (Elasrag, 2014; Mollah et al , 2017).…”

Section: Literature Reviewmentioning

confidence: 99%

The role of knowledge diffusion in evolving governance principles for Islamic banking

Malik

Ullah

Jan

et al. 2021

IMEFM

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Purpose This study aims to describe the role of knowledge diffusion in evolving governance principles for Islamic banking. Design/methodology/approach This study develops a discursive theoretical debate using the discourse analysis method on the Sharīʿah principles related to interest (Riba), excessive uncertainty (Gharrar) and profit and loss sharing and their convergence with the conventional banking principles of profitability, solvency and liquidity. Findings The study proposes a novel framework that describes how knowledge diffusion bridge-up the Sharīʿah and banking principles in terms of integration of banking principles by Sharīʿah scholars, integration of Sharīʿah principles by managers and the resultant, emergent principles for the governance of Islamic banking. Practical implications The proposed framework can inform professionals on how knowledge of banking practices and Sharīʿah can help them in governing Islamic banking. The Board of Directors may adopt a holistic approach for encouraging enhanced interactions between Sharīʿah scholars and managers. Such interaction may be increasing harmony, reducing conflicts and better coordination resulting in Sharīʿah-compliant and market wise viable products and services, thus increasing banking profitability. Originality/value This is the first study, which acknowledges and illustrates the role of the knowledge diffusion process in evolving governance principles for Islamic banks. This paper contributes to the theory of corporate governance by using the knowledge, aptitude and practice theory lens to examine conceptually how Islamic banking governance principles emerged through the knowledge diffusion process.

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Corporate governance and compliance with AAOIFI governance standards by Islamic banks

Cited by 11 publications

References 63 publications

Intellectual Capital Disclosure and Corporate Governance: Empirical Evidence From a Cross Country That Offering Islamic Bank Services

Intellectual Capital Disclosure and Corporate Governance: Empirical Evidence From a Cross Country That Offering Islamic Bank Services

Compliance and Determinants of the AAOIFI Financial Standards: Evidence from the MENA Region

The role of knowledge diffusion in evolving governance principles for Islamic banking

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