Corporate governance in Islamic perspective

Abstract

Purpose-The purpose of this conceptual paper is to develop a discussion expounding the Islamic perspective of corporate governance as a special case of a broader decision-making theory that uses the premise of Islamic socio-scientific epistemology. Islamic epistemology is premised on the divine oneness of God. The worldly explanation of divine unity is done by means of specific laws and instruments that make the Islamic epistemology functionally viable in developing, implementing and inferring from the application of the epistemological rules to different issues. In the present case the issue is of corporate governance. Design/methodology/approach-The development and conclusions of this discursive paper as a conceptual one point out the possible application of a process-oriented epistemology of unity of knowledge to corporate governance. The underlying methodology of institutional discourse and integration with dynamic parameters is formalized. Findings-The end results of the conceptual framework of this paper on corporate governance are contrasted with the approach to corporate governance in mainstream literature. Also the same Islamic theoretical and philosophical background of corporate governance is examined from the dual (mixed) Islamic economic and institutional perspective. Practical implications-The practical implications of the Islamic idea of corporate governance are immense in studying transaction cost minimization in decision-making environments. In this regard it is argued that the theory of Islamic corporate governance presents a discursive process, transparency and institutional participation that reduce transaction costs. Originality/value-The paper contributes fresh knowledge in corporate governance theory in the light of two central issues. First, an organic preference formation is studied by a process model. Second, transaction cost is minimized while pursuing a discursive and participatory model of decision making in an environment governed by the systemic meaning of unity of knowledge as its episteme. Relevant institutional policies can be developed in the light of such systemic discursion under the episteme of unity of knowledge understood and applied in the systemic organic sense.

Relationship between corporate governance and social responsibility: Evidenced in mining companies

“…Also, another practical implication is to understand how mining companies are governing their CG and SR activities, which would be useful for managers seeking to learn from best practices. Choudhury and Hoque (2006) affirm that CG is a package of contracts and rules under which a company functions, is legitimized by legal promulgation, and is protected by the legal principles of any government and state. According to Organization for Economic Cooperation and Development (1999), CG is merely part of the larger economic context in which firms operate, which includes macroeconomic policies and the degree of competition in product and factor markets.…”

“…Corporate governance (CG) is related to those legal and organizational structures that look after the internal integrity of a corporation (Choudhury & Hoque, 2006). According to Soujata (2018), most respondents acknowledge the positive impact of good CG in the daily operations of their organizations.…”

Legal Framework of Shari’ah Corporations in Malaysia: Special Reference to Waqf Corporation

“…Corporate governance is the relationship among various participants (CEO, management, shareholders, and employee) in determining the direction and performance of corporations. It ensures that the board of directors is accountable for the pursuit of corporate objectives and that the corporation itself conforms to the law and regulations (Choudhury & Hoque, 2006). Generally, it is observed that the main objective of the corporation including the so-called Islamic corporation is to maximize the shareholder's value of wealth.…”

The Implementation of Islamic Governance Disclosure: An Empirical Study of Indonesian Islamic Banking

“…Hasan, 2010;Muneeza & Hassan, 2014). Other researchers introduce it to Islamic corporate governance (Bhatti & Bhatti, 2010;Choudhury & Hoque, 2006;Elghuweel, Ntim, Opong, & Avison, 2017). The concept has been modified because it must comply with Islamic principles.…”