Value Relevance of Book Value and Earnings: A Comparison between Islamic and Conventional Banks in Malaysia

Kadri, Mohd Halim

doi:10.2139/ssrn.2687335

Cited by 5 publications

(13 citation statements)

References 24 publications

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“…Kadri (2016) shows that, although book value and earnings of IBs and CBs are relevant, those of IBs remain low compared to CBs. Our research extends and goes beyond Kadri's (2016) in two important ways. First, we explore the value relevance of accounting information for an international sample of banks offering conventional and Islamic financial services.…”

Section: Introductionmentioning

confidence: 99%

“…IBs present relevant features that could enhance the relevance of accounting information encouraging outside investors to place confidence in IBs financial reports in order to make investment decisions. To the best of our knowledge, the study of Kadri (2016) is a first attempt to analyze value relevance of accounting information in IBs. Kadri (2016) examines the value relevance of book value and earnings of 11 Malaysian Islamic and nine conventional banks from 1998 to 2012.…”

Section: Introductionmentioning

confidence: 99%

“…To the best of our knowledge, the study of Kadri (2016) is a first attempt to analyze value relevance of accounting information in IBs. Kadri (2016) examines the value relevance of book value and earnings of 11 Malaysian Islamic and nine conventional banks from 1998 to 2012. Kadri (2016) shows that, although book value and earnings of IBs and CBs are relevant, those of IBs remain low compared to CBs.…”

Section: Introductionmentioning

confidence: 99%

“…Kadri (2016) examines the value relevance of book value and earnings of 11 Malaysian Islamic and nine conventional banks from 1998 to 2012. Kadri (2016) shows that, although book value and earnings of IBs and CBs are relevant, those of IBs remain low compared to CBs. Our research extends and goes beyond Kadri's (2016) in two important ways.…”

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Accounting standards and value relevance of accounting information: a comparative analysis between Islamic, conventional and hybrid banks

Agbodjo

Toumi

Hussainey

2020

JAAR

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PurposeThe purpose of this study is to investigate the value relevance of accounting information for Islamic, conventional and hybrid banks. It also investigates the moderation impact of IFRS adoption and AAOIFI mandatory adoption on value relevance of accounting information.Design/methodology/approachUsing value relevance models, The authors run panel data regressions on 47 Islamic banks, 112 conventional banks and 42 hybrid banks (conventional banks with Islamic windows). The study covers listed banks from 14 countries over the period 2010–2018.Findingspaper offers three empirical evidences. First, the authors find that value relevance of accounting information is higher for Islamic banks, compared to conventional banks. Second, the authors find that IFRS framework strengthens the relevance of accounting information in Islamic banks, but the authors did not find the same for hybrid banks. Third, the authors find that the mandatory adoption of AAOIFI accounting standards has a moderation effect on value relevance of accounting information for both Islamic banks and hybrid banks. The robustness analysis shows that there is a significant contribution of compliance with Islamic Finance rules in IBs and HBs, which substantially reduces managers' opportunistic behavior to manage accounting information.Research limitations/implicationsOne limit of this research is the reduced number of sampled listed IBs since the authors deleted countries that do not have both listed Islamic and conventional banks.Practical implicationsThe study is useful for investors that consider the Islamic ethical practices to make their investment decisions as well as for the standards-setting bodies that focus on establishing accounting standards for the Islamic banking industry.Originality/valueThe authors contribute to the value relevance literature by providing novel evidence on the value relevance in fully-fledged Islamic, fully-fledged conventional and hybrid Banks. The authors also provide new evidence on the moderating role of International Financial Reporting Standards (IFRS) and Auditing Organization for Islamic Financial Institutions standard (AAOIFI) for the value relevance of accounting information.

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Accounting standards and value relevance of accounting information: a comparative analysis between Islamic, conventional and hybrid banks

Agbodjo

Toumi

Hussainey

2020

JAAR

View full text Add to dashboard Cite

show abstract

“…Brief history of Islamic financial institution (IFI) in Malaysia: According to Kadri (2015), Malaysian Government allows both conventional and Islamic financial system to be practiced side by side and they are licenced under two difference licences issued by Bank Negara Malaysia. Conventional financial system existed prior to independence whereas Islamic banking system only started in 1983 after the Government introduced Islamic Banking Act 1983.…”

Section: Review Of Literaturementioning

confidence: 99%