The Effect of Islamic Social Reporting Disclosure and Company Reputation on Financial Performance with Business Ethics as a Moderating Variable

Helliana ,Khomsiyah

doi:10.7176/rjfa/11-24-07

Abstract

One of the company's activities in carrying out its social activities according to an Islamic perspective is the Islamic Social Reporting disclosure. Companies that carry out social activities also aim to maintain the company's reputation. This study will analyze the effect of Islamic Social Reporting disclosure and company reputation on financial performance. The variables of Islamic Social Reporting disclosure and company reputation are moderated by business ethics. The research method used is descriptive method using the verification method approach. The sample used in this study were 11 Islamic banks in Indonesia that published annual reports from 2012-2016. The results showed that the Islamic Social Reporting Disclosure variable and the Islamic Social Reporting Disclosure variable which were moderated by business ethics had a significant effect on financial performance. Meanwhile, the company reputation variable and the company reputation variable which were moderated by business ethics did not significantly affect financial performance. In addition, business ethics as a moderating variable strengthens the influence of Islamic Social Reporting Disclosure and company reputation on financial performance. Islamic Social Reporting Disclosure variables and company reputation have a negative impact on company performance in Islamic banking because Islamic banking runs its operations emphasizing social aspects and providing greater benefits to the environment. Business ethics has a positive influence on the Islamic Social Reporting Disclosure variable and company reputation in Islamic banking so that Islamic banks that have good business ethics have better financial performance. Keywords: Islamic social reporting disclosure, company reputation, business ethics and financial performance DOI: 10.7176/RJFA/11-24-07 Publication date: December 31 st 2020

Highlights

Indonesia is a country with the largest Muslim population in the world
4.3 Discussion 4.3.1 Descriptive Statistics The results of the descriptive statistics table 1 in this study indicate that all data from X1 (ISRD), variable X2 (CR), variable X3 (BE), variable X4 (Size), variable X5 (DAR), and variable X6 (DER) have a value good representation of the whole data and spread evenly
The results of this study indicate that the Islamic Social Reporting Disclosure variable and the Islamic Social Reporting Disclosure variable which are moderated by business ethics have a significant effect on financial performance

Summary

Introduction

Indonesia is a country with the largest Muslim population in the world. Indonesia should become a pioneer for the development of Islamic finance in the world. Indonesia's potential to become a global player in Islamic finance is very large, because the large Muslim population can become a potential customer of the Islamic finance industry and has bright economic prospects. This can be seen from the relatively high economic growth (in the range of 6.0% -6.5%) which is supported by solid economic fundamentals and the increase in Indonesia's sovereign credit rating to investment grade which will increase investors' interest in investing in the domestic financial sector. The Bank Indonesia report (2019) states that in line with the Indonesian economy in general, the Sharia economy is still resilient, supported by domestic demand amid a decline in exports due to the global economic slowdown.

Results

Discussion

Conclusion