Abstract
The aim of this paper is to provide empirical evidence relating to the factors influencing the compliance of Islamic finance by Indian corporate sector. The sample comprised of the whole population of Shariah companies numbered as 190 consisted in the 500 Shariah and Nifty Shariah indices during the period of 2009 till 2014. However, after making the necessary filtration due to unavailability of data, the actual size of the sample came out to be 136 companies. The relationship between factors and the extent of compliance were analysed using Panel data regression model. The results evident that companies of larger size and higher growth rate have significant mandatory compliance. Whereas, firm size examined with net sales and board independence has withstood with compliance of voluntary and overall measures. The significant implication of our results is that it provided information on firm specific characteristics for the investors who are looking for investment in Shariah compliant companies. In this way investor would be able to keep an eye on their investment. These results may also be advantageous to the regulators in making decisions. Distinct from previous empirical research concerning to Islamic social reporting in Muslim and non-Muslim countries, this study examines the factors affecting the extent of Shariah compliance by the companies listed under Shariah Index in Indian stock exchange.
Highlights
Shariah screening process is comparatively a new entrant in the Islamic finance domain [1] [2]
Distinct from previous empirical research concerning to Islamic social reporting in Muslim and non-Muslim countries, this study examines the factors affecting the extent of Shariah compliance by the companies listed under Shariah Index in Indian stock exchange
Islamic finance differs with regard to compliance of Shariah principles from mainstream counterparts
Summary
Shariah screening process is comparatively a new entrant in the Islamic finance domain [1] [2]. To be mindful of the present market scenario and the contribution of the listed companies in an economic system, a group of dominant Shariah scholars had come about and accorded certain criteria in the course of time 1987 to make Muslim investors able to possess, hold up and transact the shares of the listed companies [5]. It is one of the major initiatives towards encouraging the development of Islamic capital market. The firm-specific characteristics whose impact on extent of Shariah com-
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