Islamic governance, sharia supervisory board, environmental performance, and Islamic social reporting: Evidence from Indonesia

Abstract

Islamic social reporting has been recognised as a major concern in Islamic accounting research in Indonesia. However, research on this issue still remains more paucity of evidence. The purpose of this study was to determine the effect of Islamic governance scores, sharia supervisory board education, cross membership of sharia supervisory boards, and environmental performance on Islamic social reporting. The population used in this study is Sharia Commercial Banks listed on the Financial Services Authoruty (OJK) during 2008-2020. The sampling technique used was purposive to obtain a sample of 150 companies that met the criteria. This study employed multiple regression analysis using the SPSS program to analyze the data. The results of this study showed that Islamic governance score and environmental performance had a positive effect on the disclosure of Islamic social reporting. On the other hand, the result further indicated that the education of the sharia supervisory board and cross-membership of the sharia supervisory board had no effect on the disclosure of the Islamic social reporting disclosure. The results contribute to providing fruitful insights to Islamic banks that Islamic governance score and environmental performance are two crucial factors determining the Islamic social reporting.

Do the characteristics of sharia supervisory board affect the disclosure of Islamic social reporting?

“…One of the main characteristics that distinguish Islamic banks from conventional banks is the existence of SSB in its structure (El Hussein, 2018). This SSB meeting will discuss opinions on all operational activities, products, and distribution of funds, including supervision of the distribution of zakat, infaq, alms, and waqf funds which are usually used as a form of corporate ISR (Nugroho et al, 2022). If SSB held more meetings, SSB coordination could be improved and sharia-based supervision could be more effective.…”

The Effect of Sharia Supervisiory Board Size and the Health Ratio of Bank Sharia to Profitability

“…Research that links the role of SSB with ROA in Islamic banking includes research from Deswanto (2020), Shabrina et al (2021), andRahmatika (2017) that size of SSB members has a positive effect on ROA. Research by Eksandy (2018), Agustina (2020), Magdalena et al (2018) and Intia & Azizah (2021) stated that SSB size had no effect on ROA, while in the research Nurmalia & Ardana (2020), Nugroho (2020) and Afiska et al (2021) SSB size negatively affects ROA.…”

The Performance of Islamic Microfinance Institutions in the COVID-19 Pandemic: Is Asset Quality Important?

“…Related to Bumacov et al (2017), Nugroho et al (2017), andPostelnicu et al (2019), one of the main activities of a microfinance institution is channelling its funds to the public. Therefore, the primary income from microfinance institutions is from interest or margin and profit-sharing from Islamic microfinance institutions (Fianto et al, 2018;Nugroho, 2014). However, the COVID-19 pandemic has hit the whole world, which has caused a decline in the public's ability, including debtors from Islamic microfinance, which can potentially reduce the asset quality of the Islamic microfinance institution.…”