The effect of Islamic values on voluntary corporate governance disclosure

Abstract

Purpose-The study examines the effect of Islamic values on the extent of voluntary corporate governance (CG) disclosure. In addition, we investigate the effect of traditional ownership structure and CG mechanisms on the extent of voluntary CG disclosure. Design/methodology/approach-We distinctively construct Islamic values and voluntary CG disclosure indices using a sample of 75 Saudi listed firms over a seven-year period in conducting multivariate regressions of the effect of Islamic values on the extent of voluntary CG disclosure. Our analyses are robust to controlling for firm-level characteristics, fixed-effects, endogeneities and alternative measures. Findings-We find that corporations that depict greater commitment towards incorporating Islamic values into their operations through high Islamic values disclosure index score engage in higher voluntary CG disclosures than those that are not. Additionally, we find that audit firm size, board size, government ownership, institutional ownership and the presence of a CG committee are positively associated with the level of voluntary CG disclosure, whilst block ownership is negatively associated with the extent of voluntary CG disclosure. Practical implications-Our study has clear practical implications for future research, practice and broader society by demonstrating empirically that corporations that voluntarily incorporate Islamic values into their operations are more likely to be transparent about their CG practices, and thereby providing new crucial insights on the effect of Islamic values on voluntary CG compliance and disclosure. Originality-To the best of our knowledge, this is the first empirical attempt at explicitly examining the effect of Islamic values on the extent of voluntary CG disclosure. We also offer evidence on the effect of traditional CG and ownership structures on the extent of voluntary CG disclosure.

Islamic Corporate Governance Dan Kinerja Keuangan Unit Usaha Syariah (UUS) Periode 2013-2017

“…Untuk memperbaiki kualitas perbankan syariah agar reputasinya dapat ditingkatkan dan kelangsungan usahanya dapat terjaga, Bank Indonesia selaku regulator mewajibkan bank syariah untuk menerapkan Good Corporate Governance (GCG) dan secara transparan mengungkapkan informasi terkait itu dalam annual reportbagi bank syariah maupun unit usaha syariah. Albassam et al, (2017) menyatakan bahwa pengungkapan terkait corporate governance yang transparan dan akuntabel adalah salah satu cara yang dapat digunakan oleh bank Islam untuk menampilkan kualitas tata kelola perusahaan yang mereka terapkan dan dapat memperbaiki reputasi mereka di hadapanstakeholders. Selain penerapan konsep ICG yang sesuai dengan prinsip syariah, kinerja dari Intellectual Capital (IC) yang melekat erat pada sumber daya manusia yang bekerja untuk bank Islam juga dinilai penting untuk meningkatkan kinerja bank Islam di Indonesia.Sumber daya manusi yang memiliki pengetahuan, keterampilan, dan kemampuan Volume 6 Nomor.…”

The determinants of Islamic governance disclosure: the case of Indonesian Islamic banks

“…While size, leverage, and ROA did not prove to have a significant effect. Albassam and Ntim (2017) found a significant effect of Islamic value disclosure on the level of corporate governance disclosure. They also revealed a significant effect of the audit firm size, board size, government ownership, institutional ownership, and the presence of a GCG committee on the level of voluntary CG disclosure.…”

“…Indrawaty and Wardayati (2016) argue that the composition of the board will influence the implementation of Islamic governance. Azid and Alnodel (2018) and Albassam and Ntim (2017) found the influence of the board composition on shariah governance disclosure. Ownership structure is also a determinant of IGD (Azid & Alnodel, 2018;Grassa, 2018).…”

The relationship between board committees and corporate risk disclosure in Saudi listed companies

“…For the control variables, the results are almost in line with previous evidence. For instance, board meeting frequency, firm size and audit firm size are associated with higher level of CRD (Al-Maghzom et al, 2016a;Albassam and Ntim, 2017;Habtoor and Ahmmad, 2017), whereas board size has a negative influence on CRD (Habtoor and Ahmmad, 2017). However, no influence of board independence and ownership concentration on CRD (Alsaeed, 2006;Elshandidy and Neri, 2015;Buckby et al, 2015).…”