Corporate governance in Islamic perspective

Abstract

Purpose -The purpose of this paper is to delineate the substantially different theory and application of corporate governance idea in Islamic financial theory contrary to the perceived one in the literature. Thus, a comparative and contrasting examination of the topic is provided. Design/methodology/approach -A theoretical and extensively comparative study of the literature to bring out the objective of presenting the systemic theory of Islamic corporate governance underlying its specific epistemological foundations. Findings -The hetrodox theory of Islamic finance in regards to the theme of corporate governance is shown to be a viable alternative way of understanding this topic in the light of the particular Islamic epistemological premise. Thus, Islamic financial perspective, exemplified here in terms of corporate governance, is expounded. Research limitations/implications -Empirical extension can be made but such epistemological responses are presently not available from the Islamic financial institutions because of their imperfect premise on the epistemology of unity of knowledge and organization on which the theory of Islamic corporate governance rests. Social implications -A vast social implication of corporate govarnance is opened by its epistemological inquiry comprehending integrated decision-making and systemic complemenatrities expending across society at large. Thereby, a socio-financial theory of corporate governance in the epistemological context is elaborated upon. Originality/value -This is a pathbreaking paper premised on its epistemological approach of unity of knowledge and learning systems as a distinct contribution in the theory of corporate governance in the field of ethical socio-financial perspective.

Corporate governance, Islamic governance and earnings management in Oman

“…Others have investigated the effect of religion/culture on: (i) EM/earnings quality (Callen et al, 2011;Du et al, 2015;Kanagaretnam et al, 2015) and financial reporting irregularities (Dyreng et al, 2012;McGuire et al, 2012); (ii) CSR (Brammer et al, 2007) and corporate philanthropy ; (iii) agency problems (Du, 2013) and tunnelling (Du, 2014); (iv) equity-pricing (El Ghoul et al, 2012), corporate decision-making (Hilary & Hui, 2009) and risk-taking (Bartke & Schwarze, 2008); and (v) tax evasion/tax fraud (Stack 2006;Richardson 2008) and corruption (Mensah 2014). Finally, there are normative/critical reviews relating to the distinctiveness of IG srtuctures (Archer et al, 1998;Rahman, 1998;Lewis, 2005;Choudhury & Hoque, 2006;Kamla et al, 2006;Abu-Tapanjeh, 2009;Williams & Zinkin, 2010) and empirical evidence on how such IG mechanisms may drive corporate outcomes and practices, such as performance, CSR, risk-taking and EM (Safieddine, 2009;Farook et al, 2011;Rahman & Bukair, 2013;Ginena, 2014;Mollah & Zaman, 2015).…”

“…Decision-making in this context will be influenced by prior managerial beliefs, emotions, experiences, intuitions/feelings and values rather than rational thought only. Arguably, this will be particularly important in the case of Oman, whereby the corporate context is characterised by corporate commitment to incorporate Islamic religious beliefs and values into corporate operations (Archer et al, 1998;Rahman, 1998;Lewis, 2005;Choudhury & Hoque, 2006;Kamla et al, 2006;Abu-Tapanjeh, 2009;Williams & Zinkin, 2010 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 board subcommittees (e.g., remuneration, nomination, risk and audit), the IGC members 1 ought to have superior knowledge of Shariah law, as well as financial training and experience in order to facilitate appropriate evaluation and interpration of corporate decisions and disclosures. In the context of EM, the presence of the SSB may offer additional assurance to shareholders and other stakeholders that managers of firms' with such a committee are less likely to engage in EM compared with those without it.…”

“…Decision-making in this context will be influenced by prior managerial beliefs, emotions, experiences, intuitions/feelings and values rather than rational thought and economic opportunism only. Arguably, this will be particularly important in the case of Oman, whereby the corporate context is characterised by corporate commitment to incorporate Islamic religious beliefs and values into business operations (Archer et al, 1998;Rahman, 1998;Lewis, 2005;Choudhury & Hoque, 2006;Kamla et al, 2006;Abu-Tapanjeh, 2009;Williams & Zinkin, 2010;Mollah & Zaman, 2015). A prominent way by which the Omani corporate decision-making process can be guided by Islamic religious beliefs and values is through the establishment of the IGC in the form of the SSB.…”

The Relationship Between Human Capital Investment, Non- Performing Financing and Profitability

“…Some studies, such as those by Cheema & Din (2013); Rehman, Ramiz Ur; Mangla (2010), and Heenetigala (2011) indicate a significant relationship between GCG and performance. The corporate governance framework encourages the accountability of the resources (Choudhury & Alam, 2013). Corporate governance can improve the effectiveness of the monitoring undertaken by the Board of Commissioners (BoC).…”

An evaluation of corporate governance practices of Islamic banks versus Islamic bank windows of conventional banks

“…What makes a difference in corporate governance and ICG is the role of Shari'ah in the decision-making process (Choudhury and Ziaul Hoque, 2006). Corporate governance practices 2.6.2 Disclosure and transparency.…”