Islamic social reporting disclosure as a form of social responsibility of Islamic banks in Indonesia

Kuat Waluyo Jati,Linda Agustina,Indah Muliasari,Diah Armeliza

doi:10.21511/bbs.15(2).2020.05

Kuat Waluyo Jati, Linda Agustina + Show 2 more

Open Access

https://doi.org/10.21511/bbs.15(2).2020.05

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Abstract

Sharia-compliant companies had to add Islamic Social Reporting when disclosing Corporate Social Responsibility information due to its characteristics. Sharia-compliant companies in Indonesia still do not do this much, and it is very interesting to study, because every sharia-based entity must comply with sharia provisions in all aspects of its activities, including when compiling social reporting. The purpose of this study is to analyze the influence of profitability, liquidity, leverage, and an Islamic Governance Score on Islamic Social Reporting in Islamic commercial banks in Indonesia. The sampling is carried out using a purposive sampling technique for up to 10 Islamic commercial banks with a six-year observation period, so there are 60 units of analysis. The data are collected using a documentation technique. The analysis in the study uses panel data regression. Based on a Random Effect Model, the study showed that profitability and leverage do not affect Islamic Social Reporting, while liquidity and the Islamic Governance Score had an impact on the Islamic Social Reporting.

Highlights

The corporate sustainability depends on profits, and on maintaining harmony with the social environment around it
The purpose of this study is to analyze the influence of profitability, liquidity, leverage, and an Islamic Governance Score on Islamic Social Reporting in Islamic commercial banks in Indonesia
Based on a Random Effect Model, the study showed that profitability and leverage do not affect Islamic Social Reporting, while liquidity and the Islamic Governance Score had an impact on the Islamic Social Reporting

Summary

Introduction

The corporate sustainability depends on profits, and on maintaining harmony with the social environment around it. Some efforts that lead to better local communities in all aspects are known as Corporate Social Responsibility (CSR). Companies recognized and considered the importance of disclosing CSR information (Khoirudin, 2013). This held true for Islamic commercial banks, most were not been listed on the Indonesia Stock Exchange (IDX).

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