Effects of Financial Performance and Governance on Corporate Social Responsibility Disclosure: Evidence from Islamic Financial Institutions in Malaysia

Haslinda Yusoff; Nor Khadijah Mohd Azhari; Faizah Darus

doi:10.7187/GJATSI2018-04

Authors

Haslinda Yusoff Faculty of Accountancy, Universiti Teknologi MARA, 40450 Shah Alam, Selangor, Malaysia
Nor Khadijah Mohd Azhari Social Sciences Institute, Eskisehir Osmangazi University, Turkeye
Faizah Darus Accounting Research Institute, Universiti Teknologi MARA, 40450 Shah Alam, Selangor, Malaysia

DOI:

https://doi.org/10.7187/GJATSI2018-04

Keywords:

Corporate social responsibility, Disclosure practice, Financial institution, Shariah, Corporate governance

Abstract

Islamic financial institutions (IFIs) are established based on Islamic foundations and their corporate practices are expected to be aligned with Islamic laws and framework. This study seeks to understand the determinants for the CSR disclosure of IFIs in Malaysia. Using the 2010 annual reports of 37 IFIs, this study investigates the effects of financial performance and corporate governance mechanism (proxied by Shariah supervisory committee or SCC and ownership structure) on CSR disclosure. Results reveal that between financial performance and SCC and ownership structure, only the latter significantly influences CSR disclosure. Overall, the findings offer insights into current reporting practices and propose ideas pertaining to the establishment of an Islamic-based CSR reporting framework. The significant factors influencing CSR disclosure may be used to develop effective practice among IFIs in Malaysia and other countries.

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