The determinants of financial, social and Sharia disclosure accountability for Islamic banks

Abstract

This study seeks to examine disclosure levels in the annual report and websites related to Islamic accountability pillars which are Sharia, social and financial. The study also aims to measure the association between disclosure levels and firm-specific characteristics. The manual content analysis is employed. Our sample consists of 117 Islamic banks (IBs) based on data of 2016 across 23 countries. The authors adopted 3 indices for Corporate Social Responsibility Report (CSRR); Sharia Supervisory Board Report (SSBR) and financial statements (FS) based on holistic benchmark. Descriptive analysis shows relatively high disclosure level for financial and Sharia disclosure (62% and 52% respectively) and relatively low for social disclosure (28%). Concerned with holistic disclosure level that measuring accountability’ pillars for all sections in the annual report, disclosure levels about Sharia, social and financial are 40%; 28% and 81% respectively. The regression analysis shows partial positive significant association of disclosure levels with existing Sharia auditing department; size of bank and probability in additional to Sharia auditing department. This study is the first one that investigates a holistic framework about Islamic accountabilities for IBs around the world (117 across 23 countries). It is also the first one that measuring the accountability concept in all sections in the annual report for IBs as well as their websites.

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