Do Sharı’ah Supervisory Board Members' Characteristics Matter? Unveiling the Impact on CSR Disclosure in GCC Countries and Malaysia

Abstract

This study uses empirical research to examine the impact of Shari’ah Supervisory board (SSB) characteristics on CSR disclosures of Islamic banks (IBs) in GCC countries and Malaysia. It sheds light on the differences that may exist between IBs within and across regions. The study uses 36 CSR indicators as derived from AAOIFI standard number seven for Islamic financial institutions (IFIs). Ordinary least squares linear multiple regression has been employed to investigate the relationship between SSB characteristics on CSR disclosures in IBs. The results of the study indicate a positive and significant link between CSR disclosure and some SSB characteristics such as the larger board size, number of scholars with doctoral qualifications in Shari’ah/fiqh and SSB members’ Shari’ah background. Moreover, an ANOVA comparison between Islamic banks in the GCC and Malaysia shows no significant difference in CSR disclosure levels between the two regions. An intraregional difference in disclosure levels among IBs in the GCC has been observed. The findings of this study are beneficial to national regulators, international policymakers and standard-setting bodies in order to improve CSR disclosure among IBs. Suggested improvements include developing uniform discursive and reporting practices, regulating characteristics of SSBs such as board size; also considering directors’ academic background or working experience.