Corporate governance attributes as determinants of the Islamic Social Reporting of Shariah-compliant companies in Malaysia

• Published in: International Journal of Economics and Management
• Main Author: Mazri K.F.; Ismail R.F.; Arshad R.; Kamaruzaman S.A.
• Format: Article
• Language: English
• Published: Universita Putra Malaysia 2018
• Online Access: https://www.scopus.com/inward/record.uri?eid=2-s2.0-85060544509&partnerID=40&md5=7b399df084695f78640e472ad4dcb57f

An increase in the number of Shariah-compliant companies in Malaysia has greatly contributed to stabilising the Islamic Capital Market (ICM). The aim of this study is to examine the nature and extent of Islamic Social Reporting (ISR) practices among Shariah-compliant companies listed on the ACE Market in Malaysia. The study also examines the potential existence of a relationship between corporate governance attributes and ISR. The study focuses on four attributes of corporate governance: Shariah supervisory board size, Audit quality, Audit committee and Muslim ownership. A sample was selected comprising 53 Shariah-compliant companies listed on the ACE Market of Bursa Malaysia during the three-year period of 2015-2017. The study uses content analysis, with ISR coded according to a modified Islamic Social Disclosure Index. The results show significant relationships between the corporate governance attributes of board size, audit quality and audit committee, and ISR. This may reflect the benefits of having more board members with a range of expertise and experience in terms of the ability to make better reporting decisions. The appointment of auditors from the Big 4 firms indicates more transparent reporting practices, while an audit committee, serving as a management watchdog, may encourage more transparent reporting in annual reports. The findings may help to strengthen the understanding of parties such as regulators, practitioners and potential investors of the attributes of effective governance among growing companies in Malaysia. © 2018 Universita Putra Malaysia.