Does Zakat Signal the Firm Value?

Abstract

Mining and manufacturing industries are two contributive sectors having high economic value. Optimalization of their zakat potential should be estimated not only addressed to provide the gain for public welfare, but firms should also obtain the economic value on their performance. This research aims to provide an empirical inference on mining and manufacturing zakatnomics. The effect of corporate zakat potential on the firms value is tested in this research. The sample comprises 47 mining companies and 180 manufacturing companies listed in Indonesia Stock Exchange by utilizing financial statements of 2018 period. The starting point finds huge the average corporate zakat potential in mining and manufacturing sector. Related to the effect test, the zakat potential is found positive on the firm value. This research also finds that the zakat impacts positively on the profitability. Therefore, it draws an inference that zakat empirically signals firm value and profitability.

The Effect of Ceo’s Attributes and Zakat on the Performance of Islamic Banks

“…These findings encourage Islamic banks to focus on CSR, especially on zakat contributions to ameliorate the Islamic bank's financial performance. This idea has been underlined by Abbas (2020) who highlighted the relationship between zakat and firm value and profitability. In addition, the author indicates that zakat contributions can be considered as a "reputation strategy" since it plays an important role in building a good business image with stakeholders that can help a firm to possess a highly positive trust in the market.…”

“…In addition, the author indicates that zakat contributions can be considered as a "reputation strategy" since it plays an important role in building a good business image with stakeholders that can help a firm to possess a highly positive trust in the market. So, according to Abbas (2020), the sign of a firm's value or profitability or marketability is earned by zakat payment.…”

Earnings Response Coefficient, Sharia Online Trading System, and Firm Value

“…The signal given by the company can be a disclosure of financial statements or Good News if there is an increase in income/profitability that exceeds investor expectations (Kasznik & McNichols, 2002). A company sends a signal to investors with the purpose of showing that it is better than another company (Abbas, 2020;Abbas et al, 2015). In the case of this research, it can be concluded that signal theory is able to inform stakeholders regarding the value of firms.…”

Exploring Zakat Payment Awareness and its Impact among MSMEs in Kartasura, Central Java, Indonesia

“…Zakat is a method of distributing public income in an equitable manner in order to reduce social inequality. Zakat, terminologically, means holy, growing, and maslahah (Abbas, 2012). Zakat is one of the pillars of Islam and is applied to people who have fulfilled the criteria for zakat (Yayuli et al, 2022).…”