The determinants of AAOIFI governance disclosure in Islamic banks

Abstract

Purpose The purpose of this study is to investigate the influence of corporate governance mechanisms on Accounting and Auditing Organization for Islamic Financial Institution (AAOIFI) governance disclosure in Islamic Banks. Design/methodology/approach To test the research hypotheses, the authors created a comprehensive AAOIFI governance disclosure index and used regression analysis for a sample of Islamic banks for the financial years within the period 2013-2015. Findings The authors found that audit committee size is the main determinant of the AAOIFI governance disclosure. Research limitations/implications This study has a number of limitations that could be taken as avenues for a future study such as, the study used the six variables of CG and the four variables of firm characteristics, based on available data. This research is limited to just Islamic banks. Originality/value The research contributes to Islamic accounting literature by identifying the driver for the AAOIFI governance disclosure for Islamic banks that mandatorily adopt AAOIFI standards.

Analysis of factors affecting sharia compliance levels in sharia banks in Indonesia

“…It is proven by the regression results of the sig value 0.0002 <0.05 and a positive coefficient of 0.424. This result is in line with previous research conducted by Glaum et al (2013), Samaha et al (2012), Sellami &Tahari (2017), andElgattani (2020). The results of this study provide empirical evidence that the existence of an audit committee is an important variable affecting the level of sharia compliance in Sharia banks.…”

“…The results of this study are inconsistent with agency theory. These results support previous research conducted by Elgattani (2020) that liquidity does not positively affect the disclosure of AAOIFI Governance in Sharia banking. In this study, it can be concluded that the first hypothesis, which states that liquidity has a positive effect on the level of sharia compliance of Sharia banks, is not supported.…”

Disclosure, Shariah governance and financial performance in Islamic banks

“…These findings confirm that the corporate disclosure degree has no effect on the performance of the UAE Islamic banks. However, Elgattani and Hussainey (2020) showed an insignificant impact between AAOIFI and the financial performance. These authors studied the influence of the AAOIFI disclosure on the IBs performance in eight countries that adopted mandatory AAOIFI standards for the years 2013-2015 through using the OLS regression analysis.…”

“…Finally, some studies propose that older banks were more efficient than younger ones because their members are more experienced and more qualified. In accordance with some earlier works, we calculate the bank size (SIZE) as the natural logarithm of the total assets (Ajili and Bouri, 2018;Elgattani and Hussainey, 2020). The bank leverage (LEV) is measured by the total debt ratio to total assets (Abdul Rahman and Bukhair, 2015).…”

“…However, Ellili and Nobanee (2017) found that the disclosure has a significant and negative association on the financial performance of the Islamic banks from 2003 to 2013. For Elgattani and Hussainey (2020), they showed that Accounting and Auditing Organization for Islamic Financial Institutions disclosure does not affect the IBs' performance measured by ROA (Return on assets). Furthermore, recent studies have investigated the link between the corporate governance and the IBs performance (Embi and Shaffi, 2018).…”