Disclosure of Islamic Social Reporting in Sharia Banks: Case of Indonesia and Malaysia

Marita Kusuma Wardani,Dea Devita Sari

doi:10.22515/jfib.v1i2.1495

Marita Kusuma Wardani, Dea Devita Sari

Open Access

https://doi.org/10.22515/jfib.v1i2.1495

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Abstract

This study aims to analyze the effect of profitability, leverage, the board of Commissioners and the number of sharia supervisory board of the Islamic Social Reporting (ISR) Islamic banks in Indonesia and Malaysia during the period 2014-2016. The dependent variable in this study is Islamic Social Reporting. While the independent variable is profitability, leverage, the board of Commissioners and the number of sharia supervisory board. The population in this study includes all Islamic banks. Samples were selected using a purposive sampling method and acquired 12 units of Islamic banks in Indonesia and 15 units of Islamic banks in Malaysia. Analysis of the data to test the hypothesis used multiple regression (OLS). The results showed that the profitability of significant positive effect on the disclosure of ISR in Islamic banks in Indonesia, but not with Islamic banks in Malaysia. The study also produced findings that the Board of Commissioners of significant positive effect on the disclosure of ISR in both countries. Furthermore, leverage and the number of sharia supervisory boards do not significantly affect the ISR.

Highlights

This study used several variables which can influence the disclosure of Islamic Social Reporting, they were: profitability, leverage, the board of commissioner size, and the number of sharia supervisory boards
On contrary with leverage variables and sharia supervisory boards, this study found results that did not have a significant effect on Islamic Social Reporting (ISR)
This study resulted in findings that leverage variables in Islamic banks both in Indonesia and Malaysia have no significant effect on ISR disclosure

Summary

INTRODUCTION

Islamic bank principally instills the ethic and social responsibility in a business model practiced. This study used several variables which can influence the disclosure of Islamic Social Reporting, they were: profitability, leverage, the board of commissioner size, and the number of sharia supervisory boards. Effect of Profitability on Islamic Social Reporting Disclosure Haniffa (2002) found out a positive relationship between the company’s profitability and voluntary disclosure level in Islamic banks as higher profits which motivated management to provide superior information because it would increase investor trust. The proposed research hypotheses are as follows: H3a : The size of the Board of Commissioners affects the ISR disclosure in sharia banking in Indonesia. With an adequate number of DPS, the implementation and disclosure of ISR become more controlled Based on this statement, the study composes the following hypothesis: H4a : The number of Sharia Supervisory Board influences ISR disclosure in Islamic banking in Indonesia. H4b : The number of Sharia Supervisory Board influences ISR disclosure in Islamic banking in Malaysia

Sample Description

Findings

Descriptive Statistics