Factors influencing corporate social responsibility disclosure by lslamic banks

The existing literature on corporate social responsibility (CSR) disclosure in the context of Islamic banks has focussed only on the extent and nature of CSR, rather than on factors influencing the level of CSR disclosure. This study investigates the types and extent of CSR information disclosure in 132 annual reports of Islamic banks from different countries for the year 2008 using a benchmark based on Shariah principles and rules. It also examines the impact of corporate governance (CG) mechanisms, consisting of the board of directors‟ effectiveness (BODE), the effectiveness of Shariah supervisory board (ESSB), the audit quality (AUDITQ), and the overall score of CG on the CSR disclosure level based on legitimacy theory. The study uses content analysis and ordinary least square regression to achieve the research objectives. The findings show that there is an increase in disclosure of CSR information. The ranking of CSR disclosure themes (from highest to lowest) is as follows: (1) top management, (2) products and services, (3) Employees, (4) Shariah supervisory board (SSB), (5) customers, (6) late repayments and insolvent clients, (7) other aspects of community involvement, (8) vision and mission statement, (9) poverty, (10) Zakah, (11) charitable and social activities, (12) unlawful transactions, (13) Quard Hassan, and (14) the environment. As for the BOD, the results show that only the board composition has a negative impact on CSR disclosure. Regarding the SSB, cross-memberships are positively associated with CSR disclosure, whilst for the AUDITQ, the members with an accounting degree, the percentage of nonexecutive directors and the meetings‟ frequency are found to influence the CSR disclosure. The findings also show that SSBE and AUDITQ significantly influence the CSR disclosure, while BODE has no influence at all. The overall score of CG also significantly influences the CSR disclosur