Shariah Information Disclosure and its Effect on Financial Perfomance among SMEs in Malaysia

Azman, Ain Noor; Ali, Noor Azman; Mahat, Fauziah; Daud, Zaidi Mat

doi:10.14738/assrj.79.8958

Cited by 2 publications

(4 citation statements)

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“…In developing economies, the rate of information disclosures was not significant on profitability and market value indicators for listed companies (Dagilienė, 2013). Azman et al. (2020) concluded that the sustainability dimension of information disclosures was insignificant on SMEs' performance.…”

Section: Literature Review and Hypothesismentioning

confidence: 99%

“…In developing economies, the rate of information disclosures was not significant on profitability and market value indicators for listed companies (Dagilien_ e, 2013). Azman et al (2020) concluded that the sustainability dimension of information disclosures was insignificant on SMEs' performance. Finally, Abba et al (2018) detected no statistical evidence supporting the association between disclosure quality and performance of listed firms from Nigeria.…”

Section: Information Disclosuresmentioning

confidence: 99%

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Corporate governance and financial performance: evidence from listed SMEs in India

Singh

Rastogi

2022

BIJ

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PurposeCorporate governance across small and medium enterprises (SMEs) is undergoing unremitting changes, primarily due to the listing of SMEs on SME exchanges. The changing aspects of governance may influence the financial performance of SMEs. This paper examines how corporate governance influences the financial performance of listed SMEs in the context of developing economies like India. Ownership concentration (promoters' holding) and information disclosures measure corporate governance in this examination.Design/methodology/approachThe sample for this study includes 88 listed SMEs from the Bombay Stock Exchange (BSE) SME platform in India. The data are collected for the period between 2018 and 2020. The study employs panel data analysis. The fixed effects model, coupled with the computation of cluster robust standard errors, is used to test the relationship between variables.FindingsThe results demonstrate that ownership concentration is not significantly related to financial performance. Further, information disclosures are inversely significant for financial performance. The results show that agency problems and information asymmetry plague the sampled firms. Further, the results of the study are indicative of inefficiencies in the governance structures of SMEs. Thus, it is evident that listed SMEs fail to reap the benefits of corporate governance.Practical implicationsThe study's findings should enlighten SME owners and managers on the benefits of corporate governance for SMEs. This is a pressing need at current times as the listing of SMEs is shifting the landscape of SME governance. Today, all firms, including SMEs, are expected to adopt and maintain near internationally benchmarked corporate governance standards. Secondly, the study's implications on how the ownership and information disclosures can be used to influence the financial outcomes of SMEs will benefit the overall business ecosystem. The policyholders and academics can use this study to boost the regulations and research in line with each other.Originality/valueReforming monitoring mechanisms of firm activities and restructuring disclosure practices are essential for SMEs to produce better financial outcomes. The true benefits of corporate governance cannot be realized without attention to financial performance. The study is relevant to practitioners, lawmakers and academics to advance corporate governance for SMEs.

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Section: Literature Review and Hypothesismentioning

confidence: 99%

Section: Information Disclosuresmentioning

confidence: 99%

Corporate governance and financial performance: evidence from listed SMEs in India

Singh

Rastogi

2022

BIJ

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“…, 2008). Lastly, some literature concludes that DISC is statistically insignificant in SMEs’ FP (Azman et al. , 2020).…”

Section: Literaturementioning

confidence: 98%

“…Conversely, several other studies provide conflicting testimony claiming a negative impact of the DISC on the FP (Dagilien_ e, 2013; Haat et al, 2008). Lastly, some literature concludes that DISC is statistically insignificant in SMEs' FP (Azman et al, 2020).…”

Section: Information Disclosures (Disc)mentioning

confidence: 98%

Corporate governance, configurational approach and financial performance: some evidence from Indian listed SMEs

Singh

Rastogi

2023

BIJ

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PurposePublic listing of small and medium enterprises (SMEs) stimulates unremitting transformations into their corporate governance (CG) practices. These transformations in CG are likely to impact the financial performance (FP). The current study examines how individual corporate CG mechanisms and their mutual interactions (configurational approach) stimulate the FP of listed SMEs. The study selects promoters’ ownership (PO), the board (B-INX) and information disclosures (DISC) as individual CG mechanisms. In addition, market competition (COMP) is considered a form of external governance/regulation.Design/methodology/approachThe study uses five years of panel data (2018–2022) of 80 SMEs listed on the Bombay Stock Exchange’s (BSE) SME listing platform in India. Panel data fixed effects and cluster robust standard errors estimated. In addition to the impact of individual CG mechanisms, their mutual interactions (configurational approach) are tested using moderated hierarchical regression and confirmed by slope tests.FindingsThe results signify the ineffectiveness of individual CG mechanisms when acting in silos. However, their mutual interactions drive the FP. A hierarchy of results is obtained. PO is the dominant form of internal CG, negatively influencing the relevance of B-INX and DISC. B-INX tends to adhere to good governance by positively moderating the impact of DISC on FP. Lastly, COMP acts as external governance that dominates the ownership effects. Findings reveal that the interactions among individual CG mechanisms are essential to the FP of listed SMEs. Such interactions adjust the agency theory dynamics of CG in these firms.Research limitations/implicationsThe study takes a holistic approach to investigate the agency theory dynamics via the mutual interactions among multiple CG forms. It highlights how the presence of a dominant form of CG can adjust the financial effect of others, thereby adjusting agency theory dynamics.Practical implicationsThese results hold practical significance for SMEs in multiple ways. SMEs should embrace configurational approach to comprehend their agency dynamics. The configurational approach of CG mechanisms is the way forward for SMEs, which are known to be financially constrained. In other words, the fact that the resiliency of SMEs is very often questioned calls for the configurational approach, where different CG mechanisms coexist to drive FP.Originality/valueThe study is by far the first of its kind to investigate the CG of listed SMEs against the backdrop of the configurational approach. The findings will benefit industry practitioners, academics and regulatory bodies to visualize the governance practices through the lenses of configurational approach.

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Shariah Information Disclosure and its Effect on Financial Perfomance among SMEs in Malaysia

Cited by 2 publications

References 0 publications

Corporate governance and financial performance: evidence from listed SMEs in India

Corporate governance and financial performance: evidence from listed SMEs in India

Corporate governance, configurational approach and financial performance: some evidence from Indian listed SMEs

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