The paper attempts to assess and examine the disclosure of the mechanisms of the corporate governance (CG), namely, board matters, nomination matters, audit matters, remuneration matters, communication matters, and risk management matters, of Shari’ah Compliant Companies (ShCCs) for a six-year period from 2008 until 2013. By using the weighted disclosure analyses approach, CG index was developed. The study examines the annual reports of a sample of 1,122 ShCCs which was selected based on the top 500 firms (by market capitalisation) for 2008 until 2013. In this study, SPSS was applied to assess the CG disclosure. Based on the descriptive analysis, the result indicates a remuneration matters (mean: 0.55) score higher than the other mechanisms; this was followed by audit matters (mean: 0.49). The study also found that, the average disclosure level of ShCCs was relatively low. Hence, the result has important implications for the enhancement of the CG disclosure of ShCC for a wider acceptance and reputation enhancement.
Haji, A., & Ghazali, M. N. A. (2013). The quality and determinants of voluntary disclosures in annual reports of Shari’ah compliant companies in Malaysia. Humanomics, 29(1), 24–42. http://doi.org/10.1108/08288661311299303
Al-Janadi, Y., Rahman, R. A., & Oma, H. N. (2012). The level of voluntary disclosure practices among public listed companies in Saudi Arabia and the UAE: Using a modified voluntary disclosure index. International Journal of Disclosure and Governance, 9(2), 181–201. http://doi.org/10.1057/jdg.2011.19
Arnold, B., & de Lange, P. (2004). Enron: An examination of agency problems. Critical Perspectives on Accounting, 15(6–7), 751–765. http://doi.org/10.1016/j.cpa.2003.08.005
Bardai, B. (2002). Ethical Responsibility and the Role of CEOs and Board of Directors in Business Corporations: An Islamic Perspective. In Corporate Governance from Islamic Perspective (pp. 81–91). Retrieved from https://scholar.google.com/scholar?q=Ethical+responsibility+and+the+role+of+CEOs+and+board+of+directors+in+business+corporation-an+islamic+perspective&btnG=&hl=en&as_sdt=0%2C5
Beattie, V., McInnes, B., & Fearnley, S. (2004). A methodology for analysing and evaluating narratives in annual reports: A comprehensive descriptive profile and metrics for disclosure quality attributes. Accounting Forum, 28(3), 205–236. http://doi.org/10.1016/j.accfor.2004.07.001
Chaganti, R. S., Mahajan, V., & Sharma, S. (1985). Corporate Board Size, Composition and Corporate Failures in Retailing Industry. Journal of Management Studies, 22(4), 400–417. http://doi.org/10.1111/j.1467-6486.1985.tb00005.x
Cheung, Y. L., Jiang, P., & Tan, W. (2010). A transparency Disclosure Index measuring disclosures: Chinese listed companies. Journal of Accounting and Public Policy, 29(3), 259–280. http://doi.org/10.1016/j.jaccpubpol.2010.02.001
Chung, R., Ho, S., & Kim, J. B. (2004). Ownership structure and the pricing of discretionary accruals in Japan. Journal of International Accounting, Auditing and Taxation, 13, 1–20. http://doi.org/10.1016/j.intaccaudtax.2004.02.003
Collins, J. C., & Porras, J. I. (1995). Building a visionary company. California management review, 37(2), 80-100.
Cuervo, A. (2002). Corporate Governance Mechanisms: a plea for less code of good governance and more market control. Corporate Governance, 10(2), 84–93. http://doi.org/10.1111/1467-8683.00272
Fama, E. F., & Jensen, M. C. (1983). Separation of Ownership and Control. The Journal of Law and Economics, 26(2), 301–325. http://doi.org/10.1086/467037
Ho, S. S. M., & Wong, K. S. (2001). A study of the relationship between corporate governance structures and the extent of voluntary disclosure. Journal of International Accounting, Auditing and …, 10, 139–156. http://doi.org/10.1016/S1061-9518(01)00041-6
Iqbal, Z., & Mirakhor, A. (2004). Stakeholders Model of Governance in Islamic Economic System. Islamic Economic Studies, 11(2), 43–63.
Jensen, M. C., & Meckling, W. H. (1976). THEORY OF THE FIRM?: MANAGERIAL BEHAVIOR , AGENCY COSTS AND OWNERSHIP STRUCTURE. Journal of Financial Economics, 3, 305–360.
Mak, Y. T. (1996). The Voluntary Use of Outside Directors by Initial Public Offering Firms. Corporate Governance, 4(2), 94–106. Retrieved from http://journals.sagepub.com/doi/10.1177/001872679504800802
Mohammed, R., Alwi, K., & Jamil, M. C. Z. (2009). Sustainability Disclosure among Malaysian Shari’ah Compliant listed Companies: Web Reporting. Issues in Social and Environmental Accounting, 3(2), 160–179.
O’Sullivan, M., Percy, M., & Stewart, J. (2008). Australian evidence on corporate governance attributes and their association with forward-looking information in the annual report. Journal of Management and Governance, 12(1), 5–35. http://doi.org/10.1007/s10997-007-9039-0
Omar, N., & Abdul Rahman, R. (2009). CSR-based corporate governance: A Malaysian study. Journal of Corporate Ownership and Control, 6(4), 176–192.
Pettigrew, A., & McNulty, T. (1995). Power and Influence in and Around the Boar
In-Text Citation: (Arsad, Said, Yusoff, & Ahmad, 2018)
To Cite this Article: Arsad, S., Said, R., Yusoff, H., & Ahmad, R. (2018). Explicating the Corporate Governance Mechanisms of Shari’ah Compliant Companies. International Journal of Academic Research in Business and Social Sciences, 8(1), 663–675.
Copyright: © 2018 The Author(s)
Published by Human Resource Management Academic Research Society (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode
