Corporate governance and Islamic banks’ products and services disclosure

Abstract

Purpose The purpose of this paper is to examine the determinants of Islamic banks (IBs) product and services disclosure (PSD). Design/methodology/approach A computer-based content analysis is run upon the annual reports for a sample of 78 IBs operating in 11 countries from 2004 to 2012 to find the number of product and services statements. The levels and trends of PSD are identified. A regression analysis to identify the factors affecting PSD in IBs is also used. Findings The findings suggest that there has been a significant improvement of PSD over time. The results show a positive association between PSD and Shariah board size, board size, chief executive officer (CEO) tenure, duality in position, blockholders and investment account holders. However, they show a negative association between PSD and institutional ownership. In addition, it appears that board independence does not affect significantly banks’ PSD. It is also found that the bank performance, bank age, leverage, listing, adoption of international financial reporting standards, adoption of Accounting and Auditing Organization for Islamic Financial Institutions and country transparency index have a positive effect on the PSD. Originality/value This study offers an original contribution to corporate disclosure literature by being the first to develop and investigate PSD for a large sample of IBs during a long period of time. It links P&S with bank corporate governance characteristics. The findings have many important policy implications. More specifically, this paper encourages regulators in the studied countries to improve corporate governance mechanisms in their Islamic banking systems through the optimization of ownership structure, CEO’s characteristics and the board’s characteristics, to promote PSD. Moreover, the findings support the theoretical predictions of the generalized agency theory. This study’s empirical evidence enhances the understanding of the corporate social responsibility disclosure environment in general and the PSD environment in particular for IBs. This study is the first one that measures PSD in the annual reports for a large cross-countries sample of IBs during a long period of time. It is also the first one that links PSD with IBs corporate governance mechanisms.

Sharia supervisory boards, governance structures and operational risk disclosures: Evidence from Islamic banks in MENA countries

“…Also, Albassam and Ntim (2017), Mokhtar and Mellett (2013) and 2008) find no association between block ownership and level of risk disclosure in large listed non-financial firms. Finally, the findings of other past studies such as Grassa et al (2018) and Neifar and Jarboui (2018) found that ownership concentration has a positive impact on Islamic banks (IBs) product and services disclosure, and operational risk disclosure in a sample of IBs, respectively. We follow the main literature that found a negative relation between block ownership and level of risk disclosure and therefore, our study sets the following hypothesis, which states that: H2: There is a significant negative link between block ownership and the level of ORDs in MENA Islamic banks.…”

Impact of Corporate Governance Mechanisms on Corporate Social Responsibility Disclosure of Publicly-Listed Banks in Bangladesh

“…The legitimacy theory supports companies to generate and execute voluntary social and environmental disclosures to legitimize their presence and operations (Lindblom, 1994), while agency theory is used to resolve conflicts of interest between principals (shareholders) and their agents (managers) and confirms that managers are inclined to disclose gladly in the presence of adequate incentives for them (Haniffa & Cooke, 2002). Based on the stakeholder-agency theory, agency conflicts are relieved when decisions of managers about voluntary disclosure are aligned with the interest of all stakeholders (Grassa, Chakroun, & Hussainey, 2018). From the agency theory perspective, executive directors are agents of the shareholders, while nonexecutive and independent directors owe the shareholders a fiduciary duty that pushes the BOD to disclose more corporate news voluntarily to reduce information asymmetry (Gul & Leung, 2004).…”

Peran Dewan Pengawas Syariah Dalam Pengungkapan Islamic Sosial Reporting

“…Variabel profil DPS diukur dengan indikator jumlah DPS; rata-rata latar belakang pendidikan DPS (Skor 3 jika memiliki latar belakang ekonomi syariah, skor 2 jika memi liki latar belakang ekonomi atau hukum Is lam, dan selain itu diberi skor 1); rata-ra ta tingkat pendidikan DPS (doktor diberi skor 3, magister diberi skor 2, dan lainnya diberi skor 1) dan rasio DPS yang memili ki pendidikan doktor. Indikator ini dikem bangkan dari penelitian Farook, Hassan, & Lanis (2011), Grassa, Chakroun, & Hussainey (2018) Setiawan, Panduwangi, & Sumintono (2018). Variabel ukuran bank syariah diukur dengan menggunakan jum lah aset perusahaan.…”