The determinants of AAOIFI governance disclosure in Islamic banks

Abstract

Purpose The purpose of this study is to investigate the influence of corporate governance mechanisms on Accounting and Auditing Organization for Islamic Financial Institution (AAOIFI) governance disclosure in Islamic Banks. Design/methodology/approach To test the research hypotheses, the authors created a comprehensive AAOIFI governance disclosure index and used regression analysis for a sample of Islamic banks for the financial years within the period 2013-2015. Findings The authors found that audit committee size is the main determinant of the AAOIFI governance disclosure. Research limitations/implications This study has a number of limitations that could be taken as avenues for a future study such as, the study used the six variables of CG and the four variables of firm characteristics, based on available data. This research is limited to just Islamic banks. Originality/value The research contributes to Islamic accounting literature by identifying the driver for the AAOIFI governance disclosure for Islamic banks that mandatorily adopt AAOIFI standards.