THE IMPACT OF CORPORATE GOVERNANCE AND ITS CONSEQUENCES ON CSR DISCLOSURE: EMPIRICAL EVIDENCE FROM ISLAMIC BANKS IN GCC COUNTRIES
Author(s)HARUN, MOHD SHUKOR BIN
KeywordsAAOIFI, Corporate Social Responsibility (CSR), Content Analysis, Disclosure Level, Determinants, GCC, Islamic banks
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AbstractThe main aim of this research is to analyse the CSR disclosure and examine its determinants and consequences among Islamic banks in the GCC (Gulf Countries Council). In fulfilling the research aims, annual reports of GCC Islamic banks for the period 2010- 2014 are analysed using manual content analysis, which involves 195 observations of 39 Islamic banks. The CSR disclosure index is constructed based on 11 dimensions using AAOIFI standard no 7, 2010. An ordinary least square (OLS) regression is used to examine the determinants and consequences of CSR disclosure in the sample Islamic banks. The analysis shows a very low level of CSR disclosure (39.9%) among the sample Islamic banks. Using CG (corporate governance) mechanisms to measure the determinant of CSR disclosure, this current study finds a significant positive association between CSR disclosure and the size of the boards of directors of the sample Islamic banks. It provides evidence that stronger corporate governance is associated with a higher level of CSR disclosure. This current study finds a negative significant relationship of CEO. Duality and AC Size and CSR disclosure. However, the results show no significant association between CSR disclosure and other corporate governance variables. To examine the economic consequences of CSR disclosure, the study uses three different proxies of firm value (MTBV, Market Capitalization and Tobin Q). Using market capitalization proxies, this current study finds that there is a negative significant relationship between CSR disclosure and firm value. The study did not find any significant relationship between other proxies. This current study suggests that there is a need to improve the current CSR disclosure practice in GCC Islamic banks by imposing additional constraints on the board of directors’ characteristics. The results inform the global debate on the need for corporate governance reform in Islamic banks, by providing insights on the role played by corporate governance mechanisms in encouraging and enhancing CSR disclosure practice among Islamic banks.
MINISTRY OF HIGHER EDUCATION,MALAYSIA (MOHE)
UNIVERSITI SAINS ISLAM MALAYSIA (USIM)