The Effect of the Board of Directors’ Characteristics on Corporate Social Responsibility Disclosure by Islamic Banks

Abstract

This study aims to explore the influence of the board of directors’ characteristics on corporate social responsibility (CSR) disclosure of Islamic banks operating in Gulf Cooperation Council (GCC) countries. A sample of 53 Islamic banks was collected from five GCC countries in 2008. An ordinary least square regression is used to examine the relationship between CSR disclosure and board of directors’ attributes. The results indicate that there is no significant relationship between selected board of directors’ characteristics (board size, board composition, and CEO duality) and CSR disclosure. The results of board size and CEO duality are consistent with the Islamic viewpoint, while board composition is not. This study suggests the need for improving the current practice of corporate governance for Islamic financial institutions by imposing additional constraints on the board of directors’ characteristics. The findings of this study are useful for policy makers in evaluating the present corporate governance standards and whether these requirements are sufficient for users of CSR information, such as investors in making investment decisions. This is the first CSR study on Islamic financial institutions using a legitimacy theory to fill the gap in the literature regarding the influence of the board of directors’ attributes on CSR disclosure by Islamic banks.