Abstract
In this paper, we offer a novel contribution to Islamic accounting literature by examining the determinants of Investment Account Holder (IAH) disclosure in Islamic banks’ annual reports. Using data from Islamic banks around the world, our regression analysis shows that the level of IAH funds, the return on IAH funds, adoption of AAOIFI standards, liquidity level, bank size and ownership have a positive significant relationship with IAHs’ disclosure level. Our findings can be useful for IAHs, regulatory bodies and information users in general as they help them to understand IAH practices in Islamic banks and the main incentives of managers to disclose IAHs’ information. The present study offers an original contribution to the Islamic accounting literature as it is the first one—to the best of our knowledge—that investigates the relationship between the specificities of Islamic banks and the extent of IAH disclosure.
Highlights
Disclosure is an important communication channel that reduces information asymmetry between insiders and outsiders and, could improve stakeholders’ decisionmaking process
The present study offers an original contribution to the Islamic accounting literature as it is the first one—to the best of our knowledge—that investigates the relationship between the specificities of Islamic banks and the extent of Investment Account Holder (IAH) disclosure
Our study offers regulatory implications as it informs regulators on the characteristics of Islamic banks that disclose IAHs’ information in their annual reports; regulators could consider setting additional requirements to ensure an increase in the compliance level of AAOIFI standards related to IAHs
Summary
Disclosure is an important communication channel that reduces information asymmetry between insiders and outsiders and, could improve stakeholders’ decisionmaking process. Investment Account Holders (IAHs) are important stakeholders in Islamic banks; they do not have the right to monitor the management of their funds. To the best of our knowledge, the literature on the determinants of IAHs disclosure is very limited This motivates us to conduct this study, especially since IAHs, as important stakeholders for Islamic banks, need relevant information to protect their rights. We contribute to Islamic accounting literature by complementing a recent study by Saidani et al (2020) and examining factors affecting IAHs disclosure for a sample of 49 fully fledged Islamic banks across 10 countries during the period 2011–2015. Our study offers regulatory implications as it informs regulators on the characteristics of Islamic banks that disclose (or not disclosure) IAHs’ information in their annual reports; regulators.
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