Determinants of Islamic social reporting disclosure and its effect on firm’s value

Arik, Susbiyani and Moh, Halim and ANIMAH, ANIMAH (2023) Determinants of Islamic social reporting disclosure and its effect on firm’s value. Emerald.

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Abstract

Abstract
Purpose – This paper aims to examine the effect of the independent board of commissioners and
profitability on Islamic social reporting (ISR) disclosure implemented in companies that belong to the group
category of Indeks Saham Syariah Indonesia (ISSI). This study also examined the advanced effect of ISR
disclosure as a company strategy to obtain a firm’s value.
Design/methodology/approach – The data of the independent board of commissioners, profitability,
ISR disclosure and firm’s value were obtained from the annual reports of companies whose shares belong to
the calculation of ISSI, totaling 24 companies. The ISR disclosure was measured using the content analysis
method. While the research model used path analysis.
Findings – This study found that the independent board of commissioners directly affects the ISR
disclosure while indirectly affects the firm’s value as mediated by the ISR disclosure. This finding indicates
that the independent board of commissioners is regarded as capable of protecting investors’ interests from
problems that may be incurred from asymmetry information. However, this study failed to prove that
profitability directly affects the ISR disclosure.
Research limitations/implications – A list of ISR disclosure items in this research adopted the list
developed by Haniffa and Othman, without any additional items. While the measurement of ISR disclosure
used the content analysis, therefore there may be subjectivity issues accidentally done while scoring.
Practical implications – This study recommends management of companies which belong to ISSI to
optimize their independent board of commissioners because it has been proven in this study that their presence
can significantly encourage a more independent, objective and fair climate while one of its main principles is to
pay attention to the interests of minority shareholders and other stakeholders. Besides, the findings can be
used to increase awareness of the company management about the importance of transparency in managing a
company because the ISR disclosure has received positive responses from investors.
Social implications – The findings of this study encourage companies to be more transparent in
presenting information. An appropriate disclosure will provide a sense of security so that the investors can
account for such earthly issues before Allah SWT, thus their spiritual satisfaction can be achieved.
Originality/value – This paper investigated further the effect of ISR disclosure on firm’s value which has
never been performed by previous scholars. The ISR disclosure is a strategy to obtain legitimacy from
investors, which was analyzed using the legitimacy theory

Contribution

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Item Type:	Peer Review
Subjects:	300 Social Science > 330 Economics > 332 Financial Economics, Finance
Divisions:	Faculty of Economics > Department of Accounting (S1)
Depositing User:	Arik Susbiyani | ariksusbiyani@unmuhjember.ac.id
Date Deposited:	08 May 2023 01:07
Last Modified:	10 May 2023 02:00
URI:	http://repository.unmuhjember.ac.id/id/eprint/16897

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