Sharia corporate governance and financial reporting timeliness: Evidence of the implementation of banking regulations in Indonesia

Abstract

This paper aims to study Islamic banking (IB) regulations related to the influence of the Sharia corporate governance (SCG) mechanism on financial reporting timeliness (FRTL) in Indonesia. The unbalanced panel data obtained empirically during a period that ranges from 2016 to 2019 includes observations from 54 Islamic commercial banks (ICb), 82 Sharia business unit (SBu) banks and 82 conventional banks (CB). Panel regression model is used in this study to adjust the unbalanced panel data obtained. The findings indicate that the variation of FRTL for IBs (represented by ICb) is determined by Sharia corporate governance (SCG) mechanisms. Further findings relate to a comparative study of variations in FRTL between ICb, SBu, and CBs. Although there are different determinants between ICb (SCG) and CBs (CG), there is no difference in FRTL variation between the two. Meanwhile, between ICb and SBu, whose regulations have the same determinant, there are differences between the two FRTL variations. The novelty of this paper is that, firstly, SCG is constructed on the basis of the IBs regulation to determine FRTL, and secondly, the variationі in FRTL between the IBs and CBs groups are compared.

The Effect of Shariah Committee Composition on Malaysian Islamic Banks’ Audit Report Lag

“…Given their critical role in the operation of the Islamic banking sector, the composition of influential Shariah committees is another factor that might impact Islamic banking institutions' business-related risks and audit report lag. Rusmin and Evans (2017), Oussii and Boulila Taktak (2018), Kaaroud et al (2020) and Zulfikar et al (2020) found a negative association between Shariah committee expertise and audit report lag. Having accounting/financial knowledge within the Shariah committee may aid the committee in dealing with Shariah concerns, particularly those involving accounting/financial matters.…”

“…In addition, the committee should be informed of the banks' operational risks and financial performance, as they are essential factors in developing a thriving financial product. Zulfikar, Bawono, Mujiyati, and Wahyuni (2020) and Kaaroud et al (2020) have studied the association between the Shariah board characteristics and audit report delay. In a study in Indonesia, Zulfikar et al (2020) concluded that the presence of a Shariah committee could reduce audit report delays.…”

“…Zulfikar, Bawono, Mujiyati, and Wahyuni (2020) and Kaaroud et al (2020) have studied the association between the Shariah board characteristics and audit report delay. In a study in Indonesia, Zulfikar et al (2020) concluded that the presence of a Shariah committee could reduce audit report delays. On the other hand, Kaaroud et al (2020) could not conclusively determine a relationship between the Shariah committee and audit report delay.…”

“…Shariah Policy 2019 recommends that the Shariah committee includes members with expertise in finance and accounting knowledge to provide assistance and supervision on the technical matters of accounting and finance. Recent literature also emphasizes the importance of Shariah committee expertise to organisations (Basiruddin & Ahmed, 2019;Isa & Lee, 2020;Kaaroud et al, 2020;Noordin & Kassim, 2019;Oussii & Boulila Taktak, 2018;Rusmin & Evans, 2017;Zulfikar et al, 2020). Isa and Lee (2020) suggested that the Shariah committee's expertise is negatively related to risk-taking.…”

CEO hubris and Islamic banks’ performance: Investigating the roles of Sharia board vigilance and CEO power

“…The results of this empirical study indicate that SSB members with accounting and/or finance specialists (H2a) cannot moderate the detrimental impact of CEO hubris on IBs' performance. Their membership can be considered only related to the process and analysis of financial reporting(Baklouti, 2020;Khan & Zahid, 2020;Zulfikar et al, 2020), regardless of the CEO behavior. However, this study succeeded in proving that the vigilance of reputable SSB members weakened the bad influence of CEO hubris on IBs' performance (H2b).…”