We explore the level and determinants of compliance with Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) financial and governance standards by Islamic banks (IBs). Methodology: Our sample consists of 43 IBs across 8 countries. We use ordinary least squares regression analyses to examine the impact of Bank-specific characteristics and corporate governance mechanisms concerned with Board of Directors (BOD) and Sharia Supervisory Board (SSB) on levels of compliance with AAOIFI standards. Findings: We find that the average compliance level based on AAOIFI standards concerning the Sharia Supervisory Board Report (SSBR) is 68%; corporate social responsibility report (CSRR) is 27% and presentation of financial statements (FS) is 73%. The aggregate disclosure based on the 3 indices is 56%. The analysis also shows that size, existing Sharia auditing department, age, and corporate governance of SSB are the main determinants of compliance levels.

Purpose This paper aims to examine the extent to which financial performance (FP) represents one of the main determinants for tone disclosure (TD) in Egyptian annual reports. The authors also measure the bidirectional relationship between TD and FP. Design/methodology/approach The manual content analysis is used to measure the levels of TD in annual reports for a sample of 105 firms listed on the Egyptian stock market. The sample covers a three-year period (2011-2013). Findings The descriptive analysis in this paper shows that Egyptian firms disclose more good news than bad news. Therefore, the net news disclosure, or net variances, between good/bad is positive. The empirical analysis shows a positive association between the narrative disclosure of good/bad news and FP based on return on assets. The authors also find a highly significant association between the auditor, profitability, leverage, firm growth and financial reporting of good/bad news information. Finally, the results of the ordinary least squares regression show that the causality between the two endogenous variables runs from FP to TD. Thus, TD is determined by FP. Originality/value This study offers a novel contribution to disclosure studies by being the first study to examine TD in one of the developing countries.

The uniqueness of Islamic banks (IBs) is shown through compliance with Islamic law (Sharia) which is approved through Sharia Supervisory Board (SSB) and presented for stakeholders by Sharia Supervisory Board Report (SSBR). This study seeks to achieve three main objectives as follows: (1) it identifies the degree of IBs’ transparency in compliance with Sharia and their commitment with the governance standards that issued by Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI); (2) it aims to measure the impact of adoption AAOIFI on the degree of Sharia disclosure; and (3) it seeks to test the economic consequences of Sharia disclosure based on its impact on financial performance. We analyse content of annual reports and websites of 120 IBs across 20 different countries for year 2016. Regression analysis shows compliance level for Sharia disclosure based on our index for SSBR is 53% with higher level compliance for IBs that apply AAOIFI standards comparing with banks that adopting International Financial Reporting Standards (IFRS). Therefore, adopting AAOIFI has a positive effect on enhancing the degree of Sharia disclosure. Moreover, Sharia compliance has a positive influence on financial performance based on both Returns on Assets (ROA) and Tobin’s Q as a robustness test. This study adds value to Islamic accounting literature by being a primary study. There is a lack of research on the topic and this paper measures the consequences of Sharia disclosure over the financial performance of IBs as well as the role of Islamic standards (AAOIFI) in enhancing the image of Islamic banks through supporting their compliance with Sharia.

This study seeks to examine disclosure levels in the annual report and websites related to Islamic accountability pillars which are Sharia, social and financial. The study also aims to measure the association between disclosure levels and firm-specific characteristics. The manual content analysis is employed. Our sample consists of 117 Islamic banks (IBs) based on data of 2016 across 23 countries. The authors adopted 3 indices for Corporate Social Responsibility Report (CSRR); Sharia Supervisory Board Report (SSBR) and financial statements (FS) based on holistic benchmark. Descriptive analysis shows relatively high disclosure level for financial and Sharia disclosure (62% and 52% respectively) and relatively low for social disclosure (28%). Concerned with holistic disclosure level that measuring accountability’ pillars for all sections in the annual report, disclosure levels about Sharia, social and financial are 40%; 28% and 81% respectively. The regression analysis shows partial positive significant association of disclosure levels with existing Sharia auditing department; size of bank and probability in additional to Sharia auditing department. This study is the first one that investigates a holistic framework about Islamic accountabilities for IBs around the world (117 across 23 countries). It is also the first one that measuring the accountability concept in all sections in the annual report for IBs as well as their websites.

No abstract