The Effect of Intellectual Capital and Islamic Corporate Governance on Islamic Social Reporting Disclosure with Financial Performance Mediation

Authors

  • Ichsan Setiyo Budi Accounting Department, Economics and Business Faculty, Pembangunan Nasional "Veteran" University. Jl. Ringroad Utara 102 Condongcatur Yogyakarta 55283
  • Rahmawati Prof Rahmawati Prof Accounting Department, Economics and Business Faculty, Sebelas Maret University. jl. Ir. Sutami 36A Kentingan Surakarta 57126

DOI:

https://doi.org/10.21512/tw.v20i2.5842

Keywords:

Islamic corporate governance, intellectual capital, Islamic social reporting, financial performance

Abstract

This research aimed to examine the indirect effect of Islamic Corporate Governance (ICG) disclosure and Intellectual Capital (IC) on Islamic Social Reporting (ISR) disclosure with financial performance as a mediating variable in Islamic Banking in Indonesia. It used secondary data with annual report data sources and financial statements on Islamic banking in Indonesia. They were testing this research using regression analysis with data for the annual reporting period of 2011 through 2014. The result finds that ROE mediates the effect of ICG on ISR disclosure. This shows that good management of Islamic banks will produce high financial performance so that they are able to carry out their social roles well too. The contribution of this research is to develop a new model of the role of financial performance mediating the effect of ICG disclosure on ISR so that it is beneficial for the development of science.

Dimensions

Plum Analytics

References

Abu-Tapanjeh, A. M. (2009). Corporate governance from the Islamic perspective: A comparative analysis with OECD principles. Critical Perspectives on Accounting, 20(5), 556–567. doi: 10.1016/j.cpa.2007.12.004.

Aburaya, R. (2012). The relationship between corporate governance and environmental disclosure: UK evidence. Durham: Durham University.

Adiertanto, C. P., & Chariri, A. (2013). Analisis pengaruh Islamic Corporate Governance terhadap pengungkapan Corporate Social Responsibility (Studi kasus pada bank syariah di Asia). Diponegoro Journal Of Accounting, 2(1), 1-15.

Ado, A. B. (2016). Corporate governance as a mechanism for measuring financial performance of banks in Nigeria. Malaysia: Universiti Utara Malaysia.

Aggarwal, R. K., & Yousef, T. (2007). Islamic banks and investment financing. Journal of Money, Credit, and Banking, 32(1), 93-120.

Al-Baidhani, D. (2013). The effects of corporate governance on bank performance: Evidence from the Arabian Peninsula. SSRN Electronic Journal, 1-31. doi: 10.2139/ssrn.2284814.

Al-Hussain, A. H. (2009). Corporate governance structure efficiency and bank performance in Saudi Arabia. Arizona: University of Phoenix.

Anas, A., Rashid, H. M. A., & Annuar, H. A. (2015). The effect of award on CSR disclosures in annual reports of Malaysian PLCs. Social Responsibility Journal, 11(4), 831–852.

Ayadi, S. D. (2004). Determinants of the corporate decision to disclose stakeholders’ reports in France. In 27th annual congress of the European Accounting Association. Prague, Czech Republic. Pp 1-28.

Azid, T., Asutay, M., & Burki, U. (2007). Theory of the firm, management and stakeholders: An Islamic perspective. Islamic Economic Studies, 15(1), 1-30.

Beltratti, A. (2005). The complementarity between corporate governance and corporate social responsibility. The Geneva Papers on Risk and Insurance-Issues and Practice, 30(3), 373–386.

Chapra, M. U., & Ahmed, H. (2002). Corporate governance in Islamic Financial Institutions; Islamic Research and Training Institute. Jeddah: Islamic Development Bank.

Choudhury, M. A., & Hoque, M. Z. (2004). An advanced exposition of Islamic economics and finance. Asian Journal of Business and Accounting, 6(2), 65–104.

Dalwai, T., Chugh, G., Prasad, S., Mohammadi, S. S. (2014). Can effective corporate governance of Islamic banks enhance financial inclusion in the Sultanate of Oman? International Journal of Humanities and Social Sciences (IJHSS), Conference edition, 61–74.

Darmadi, S. (2013). Corporate governance disclosure in the annual report: An exploratory study on Indonesian Islamic banks. Humanomics, 29(1), 4–23. https://doi.org/10.1108/08288661311299295.

Dusuki, A. W. (2011). Maqasid al-shari’ah, maslahah, and corporate social responsibility. American Journal of Islamic Social Sciences, 24(1), 25–45.

Elkington, J., & Rowlands, I. H. (1999). Cannibals with forks: The triple bottom line of 21st century business. Alternatives Journal, 25(4), 42-43. doi:10.1002/tqem.3310080106.

Faozan, A. (2013). Implementasi good corporate governance dan peran dewan pengawas syariah di bank syariah. La_Riba: Jurnal Ekonomi Islam, 7(1), 1–14.

Farook, S., & Lanis, R. (2007). Banking on Islam? Determinants of corporate social responsibility disclosure. Journal of Islamic Accounting and Business Research, 2(2), 114-141.

Freeman, R. E. (1984). Strategic management: A stakeholder approach. Boston: Pitman Publishing.

Ghozali, I. (2006). Aplikasi analisis multivariate dengan program SPSS. Semarang: Badan Penerbit Universitas Diponegoro.

Giannarakis, G. (2014). Corporate governance and financial characteristic effects on the extent of corporate social responsibility disclosure. Social Responsibility Journal, 10(4), 569–590. doi: 10.1108/SRJ-02-2013-0008.

Gomes, R. C. (2006). Stakeholder management in the local government decision-making area: Evidences from a triangulation study with the English local government. Brazilian Administration Review, 3(1), 46-63.

Habbash, M. (2016). Corporate governance and corporate social responsibility disclosure: Evidence from Saudi Arabia. Social Responsibility Journal, 12(4), 740–754.

Hamza, H. (2013). Sharia governance in Islamic banks: Effectiveness and supervision model. International Journal of Islamic and Middle Eastern Finance and Management, 6(3), 226–237. doi: 10.1108/IMEFM-02-2013-0021.

Haniffa, R. (2002). Social reporting disclosure: An Islamic perspective. Indonesian Management & Accounting Research, 1(2), 128–146.

Haniffa, R., & Cooke, T. E. (2002). Culture, corporate governance, and disclosure in Malaysian corporations. Abacus, 38(3), 317–349.

Haniffa, R., & Hudaib, M. (2007). Exploring the ethical identity of Islamic banks via communication in annual reports. Journal of Business Ethics, 76(1), 97–116.

Hassan, A., & Harahap, S. S. (2010). Exploring corporate social responsibility disclosure: The case of Islamic banks. International Journal of Islamic and Middle Eastern Finance and Management, 3(3), 203–227. https://doi.org/10.1108/17538391011072417.

Hassan Al-Tamimi, H. A. (2012). The effects of corporate governance on performance and financial distress: The experience of UAE national banks. Journal of Financial Regulation and Compliance, 20(2), 169–181. https://doi.org/10.1108/13581981211218315.

Inchausti, B. G. (1997). The influence of company characteristics and accounting regulation on information disclosed by Spanish firms. European Accounting Review, 6(1), 45–68. https://doi.org/10.1080/096381897336863.

Iqbal, Z., & Mirakhor, A. (2004). Stakeholders model of governance in Islamic economic system. Islamic Economic Studies, 11(2), 43-63.

Janggu, T., Joseph, C., & Madi, N. (2007). The current state of corporate social responsibility among industrial companies in Malaysia. Social Responsibility Journal, 3(3), 9–18.

Kamath, G. B. (2007). The intellectual capital performance of the Indian banking sector. Journal of Intellectual Capital, 8(1), 96–123.

Khan, M. A. (2012). An empirical study of students’ perception of ethical behaviour in higher education institutions in Pakistan. In Actual Problems of Economics (Vol. 132, pp. 295–310). Berlin: Springer.

Khoirudin, A. (2013). Corporate governance dan pengungkapan Islamic Social Reporting pada perbankan syariah di Indonesia. Accounting Analysis Journal, 2(2).

Maali, B., Casson, P., & Napier, C. (2006). Social reporting by Islamic banks. Abacus, 42(2), 266–289.

Mallin, C. (2007). Editorial Note. Corporate Governance: An International Review, 15(6), 1025-1025. https://doi.org/http://dx.doi.org/10.1111/j.1467-8683.2007.00626.x.

Musibah, A. S., & Alfattani, W. (2014). The mediating effect of financial performance on the relationship between shariah supervisory board effectiveness, intellectual capital, and corporate social responsibility of Islamic banks in Gulf Cooperation Council countries. Asian Social Science, 10(17), 139-164. doi:10.5539/ass.v10n17p139.

Nawaiseh, M. E., Boa, S. S. A., & El-shohnah, R. A. Z. Y. (2015). Influence of Firm Size and Profitability on Corporate Social Responsibility Disclosures by Banking Firms (CSRD): Evidence from Jordan. Journal of Applied Finance and Banking, 5(6), 97-111.

Othman, R., Thani, A. M., & Ghani, E. K. (2009). Determinants of Islamic social reporting among top shariah-approved companies in Bursa Malaysia. Research Journal of International Studies, 12(10), 4–20.

Othman, R., & Thani, A. M. (2010). Islamic social reporting of listed companies in Malaysia. International Business & Economics Research Journal, 9(4), 135–144. doi: 10.19030/iber.v9i4.561.

Proctor, R., Burton, N., & Pierce, A. (2006). Managerial accounting for business decisions. London: Pearson Education.

Pulic, A. (2000). VAICTM–An accounting tool for IC management. Stiria: University of Graz.

Quttainah, M. A. (2012). Four essays on the impact of shari’ah (Islamic law) as an institutional governance mechanism on organizational performance and managerial behavior. New York: Rensselaer Polytechnic Institute.

Raman, A. A., & Bukair, A. A. (2013). The influence of the shariah supervision board on corporate social responsibility disclosure by Islamic banks of Gulf Co-operation Council countries. AJBA, 6(2), 65-104.

Rehmans, R., & Mangla, I. U. (2010). Corporate governance and performance of financial institutions in Pakistan: A comparison between conventional and Islamic banks in Pakistan. The Pakistan Development Review, 49(4), 461–475.

Sairally, B. S. (2013). Evaluating the corporate social performance of Islamic financial institutions: An empirical study. International Journal of Islamic and Middle Eastern Finance and Management, 6(3), 238–260.

Sam’ani. (2008). Pengaruh good corporate governance dan leverage terhadap kinerja keuangan pada perbankan yang terdaftar di Bursa Efek Indonesia tahun 2004-2007. Semarang: University of Diponegoro.

Sekaran, U., & Bougie, R. (2016). Research methods for business: A skill building approach. New Jersey: John Wiley & Sons.

Shazila, Z. (2012). Determinants of voluntary disclosure by shariah approved companies. Malaysia: Universiti Utara Malaysia.

Siregar, S. V., & Bachtiar, Y. (2010). Corporate social reporting: Empirical evidence from Indonesia Stock Exchange. International Journal of Islamic and Middle Eastern Finance and Management, 3(3), 241–252.

Tagesson, T., Blank, V., Broberg, P., & Collin, S. (2009). What explains the extent and content of social and environmental disclosures on corporate websites: A study of social and environmental reporting in Swedish listed corporations. Corporate Social Responsibility and Environmental Management, 16(6), 352–364.

Tagesson, T., Klugman, M., & Ekström, M. L. (2013). What explains the extent and content of social disclosures in Swedish municipalities’ annual reports. Journal of Management & Governance, 17(2), 217–235. doi:10.1007/s10997-011-9174-5.

Yaghoobnezhad, A., Nikoomaram, H., & Salteh, H. M. (2012). The investigation of the relationship between corporate governance and earnings quality. African Journal of Business Management, 6(11), 3898–3912.

Yüksel, S., & Özsari, M. (2017). Identifying the factors influence Turkish Deposit Banks to join corporate social responsibility activities by using panel probit method. International Journal of Finance & Banking Studies, 6(1), 39-50. DOI: 10.20525/ijfbs.v6i1.643.

Downloads

Published

2019-10-18
Abstract 1151  .
PDF downloaded 277  .