Roshima Said

Probing Corporate Ethical Identity of Shari’ah Compliant Companies☆

The need for Islamic financial system in Malaysia arose from the fact that more than 51 per cent of the population is made up of Muslims. From Islamic perspectives, ethics oversees all aspects of life. Islam places the highest importance on ethical values and principles in all aspects of human life. Ethical norms and moral codes evident from the verses of the Qur’an and Sunnah are numerous and comprehensive (Khan, 2009). Since the awareness and demand for investing in accordance to Islamic principle is increasing, the number of Shari’ah Compliant companies in Malaysia has increased tremendously over the years. Shari’ah Compliant companies are seen to incorporate Islamic ethical identity, thus the organization should depict the true Islamic Values of corporate strategy, structure, communication and culture embracing both tangible and intangible elements that make them distinctive. Thus this study is trying to assess the extent of Corporate Ethical Identity (CEI) that are being embraced by these Shari’ah compliant companies via companys annual report. The CEI checklist was developed and sent to experts (auditors and academia) to verify all the selected items. Initially, the checklist consists of 88 items, and after taking into consideration the experts’ opinions (academia and practitioners), the final checklist with 83 items has been established. Content analysis was used in order to construct the CEI Index. The unit of analysis for this study is the annual report of 153 Shari’ah Compliant public listed companies on Main Board companies of Bursa Malaysia for the year ended 2009. The findings of the study show that the level of CEI of selected companies is lower with the average of below 25 per cent. Furthermore, this study adds to prior related studies on corporate identity that focused mainly on Islamic perspectives.

Chapter 9 The Extent of Disclosure of Corporate Social Responsibility in Malaysia

Corporate social responsibility (CSR) is a concept that extends the traditional focus of business in achieving bottom-line results to triple bottom-line results and the concept of sustainability that focus on economic, environmental and social performance. The Bursa Malaysia CSR Framework (2006) defined CSR as open and transparent business practices that are based on ethical values and respect for the community, employees, the environment, shareholders and other stakeholders. This CSR framework was designed to deliver sustainable value to the society at large.

Corporate Crime Tolerance of Accounting Professionals in Malaysia

The downfall of giant corporations revealed coalitions of the crime by key players in the organizations, most importantly including accounting professionals who have access to finance and control. The remedy for such coalitions is crucial in order to suppress corporate crime from threatening the global economy. For such reasons, there rise the needs to look at corporate crime in the perspective of the accounts professionals who play some of the most important role in the prevention measures. The purpose of this paper is to investigate the level of tolerance toward corporate crime behaviors in the perception of accounting professionals in Malaysia. Questionnaire was used in this study to seek MIA members’ feedback about 15 given corporate crime scenarios which cover various types of corporate crime. The results indicate that accounting professionals in Malaysia show the lowest tolerance level toward fraud attempts while giving relatively the highest tolerance level toward promoting buddy situations in corporate crime. Furthermore, the result shows that there is a significant difference in scores for those who have formal religious and groups who do not have formal religious education. The results also indicate lower likelihood to corporate crime tolerance for those who have formal religious education in relation to those without formal religious education, thus suggesting for formal religious educational background as an important indication to lower the propensity for corporate crime behaviors in the future.

Corporate crimes in Malaysia: a profile analysis

Purpose Corporate crimes in Malaysia are increasing each year. These issues are bothersome to the investors, creditors and the public as a whole because of the huge impact on all of them. Employees lose their jobs, investors do not get optimal return on their investments and creditors are unable to get their payments, and as a result, the public lose their faith on the legislation. The purpose of this study is to analyze the cases charged under Securities Commission and Bank Negara Malaysia. Design/methodology/approach This study analyzes the cases in Securities Commission and Bank Negara under four criteria which are the corporate profiles, details on crime committed, perpetrators profile and, finally, the offence. Findings The findings show that top-level management, especially the directors, usually commit such crime and many of them are male. Originality/value This study looks into the criteria of the cases charged under both institutions, Securities Commission and Bank Negara, which can be used to create awareness among the organizations in Malaysia.

Religious, Educational Background and Corporate Crime Tolerance by Accounting Professionals

This paper serves to obtain the level of tolerance towards corporate crime activities in the perception of accounting professionals in Malaysia. The study focuses on the Islamic religious, educational background and their relationship with the level of acceptance/tolerance by these professionals towards corporate misbehaviours. For that purpose, this paper first deliberates the teachings of Islamic ethics in the Islamic religious education. Then, the study investigates the Islamic religious education received by Muslim professionals and its relationship with their corporate crime acceptance level. The study further proposes religious education as a possible mechanism to improve acceptance level towards corporate crime. There are two types of religious educations: firstly, whether the professional attended religious classes (informal) and secondly, whether they received formal religious education. The results indicate that formal religious, educational background is found to be significantly correlated with lower acceptance level to corporate crime.

Analysis of the Role of Zakat on Islamic Banking Performance

Islamic banking has tremendous development since the system has strong foundation that based on Syari’ah principles. One of the Syari’ah requirements is to pay zakat as one of Islamic pillars. From Islamic point of view, Allah promise to those who contribute their wealth (zakat), Allah will award the contributors multiple times. Thus, the Allah’s promise is the main motivation of the study to investigate the relationship between corporate zakat payable and firm’s performance of the Islamic banks in Malaysia. The study used Pearson correlation coefficient to analyse the relationships. The study conducted on 16 Islamic banks in Malaysia and used secondary data extracted from annual reports for the year ended 2010 until 2015. This study showed that there was a low degree of commitment to pay corporate zakat among the Islamic banks in Malaysia. However, it is interesting to note that there is significant relationship between firm’s size and amount of zakat paid which reveals that total asset will grow as amount of zakat increase.

Corporate Governance and Corporate Social Responsibility (CSR) Disclosure: The Moderating Role of Cultural Values

Abstract The principles of sustainable development argue that organizations should make decisions not only based on economic or financial factors but also based on the long-term social and environmental consequences. The Code on Corporate Governance is one of the drivers for corporate social responsibility (CSR) reporting in Malaysia. Additionally, the way managers execute their responsibilities may be affected by their own tradition, beliefs, values, and culture. Thus, this chapter aims to examine the relationship between corporate governance characteristics and CSR disclosure and to investigate the influence of cultural values (Board’s Culture Domination) on the relationship between corporate governance and corporate social responsibility. A sample of 150 companies from the main board of Bursa Malaysia for year ended 2006 are chosen for the purpose of this study due to the year of the introduction of Bursa Malaysia CSR Framework. Based on available data, a CSR index is constructed. Hierarchical regression analysis is used to examine the relationship between the CSR disclosure index and the independent variables and also the moderating effect of Board’s Culture Domination. Results show that government ownership and audit committees have a positive and significant influence on CSR disclosure. Furthermore, the findings show that the Board’s Culture Domination moderate the relationship between audit committee, number of shareholders, foreign ownership, and CSR disclosure.

Corporate social responsibility disclosure index of Malaysian Shariah – compliant companies

Purpose The purpose of this paper is to examine the extent of Maqasid Al-Shariah corporate social responsibility (CSR) disclosure of public listed companies of Shariah-compliant companies in Malaysia. Design/methodology/approach Content analysis was used to construct the Maqasid Al-Shariah CSR disclosure index. Furthermore, the study used a checklist that covered four themes of CSR, namely environment, community involvement, human resource and product, and five elements of Maqasid Al-Shariah, namely, faith, human self, intellect, posterity and wealth. Findings The findings of the study show that the level of Maqasid Al-Shariah CSR disclosure index is generally low. The study found that Shariah-compliant companies revealed more community-related theme and an intellect element in their annual reports for the year of the survey. Originality/value This paper is one of few papers that has developed the Maqasid Al-Shariah CSR disclosure index that used the aforementioned four themes of CSR and five Maqasid Al-Shariah elements.

The Corporate Ethical Identity of Shari’ah Compliant Companies

Abstract Purpose The number of Shari’ah Compliant companies is tremendously increasing year by year in Malaysia. In an attempt to win the trust and confidence of its Muslim investors and stakeholders, the Shari’ah Compliant companies must portray their sincerity and earnestness in complying with Islamic values which may have implications on winning the trust of Muslim investors largely from oil-rich Arab Gulf Region which have flush of funds currently. Thus, the purpose of the study is to gauge the extent of the corporate ethical identity (CEI) that is being incorporated by the Shari’ah Compliant companies in Malaysia. Design/methodology/approach This study used the content analysis to develop CEI by adding all the items covering the four themes, which were underlying philosophy and values, interest-free and Islamically acceptable activities, developmental and social goals and environment theme. This CEI index was developed by using the dichotomous, which the score of ‘1’, if the company disclose the items and ‘0’, if it is not. The process will add all the scores and equally weighted. Findings The study showed that the level of communicated ethical identity disclosed in annual reports of Shari’ah Compliant companies for the year ended 2008 is relatively low with average of 23.66%. Overall, the findings of the study showed that the Shari’ah Compliant companies revealed more communicated ethical identity on Theme 1 (underlying philosophy and values) in the annual reports for the year ended 2008. In addition, in the year 2008, the findings showed that the dimension of developmental and social goals has the most influence towards the ethical identity index of Shari’ah Compliant companies. Research limitations/implications The source of data in this study is limited to companies’ annual report. In other words, the extent of communicated ethical identity index is constructed limited to company’s annual report. The study has shown that annual reports is not the only means or medium of disclosure. Hence, studying other forms of disclosure on communicated ethical identity could possibly complement and add value to any investigation on the nature and extent of communicated ethical identity through annual reports in the future. Practical implications The study is expected to alert the Securities Commission with regard to the definition of Shari’ah Compliant companies which should not just include ‘good public perception and image company’ but also the extent of the application of Islamic values in the conduct of their businesses. Originality/value The study provides a new benchmark of an ideal Islamic communicated CEI index based on Shari’ah principles and also past literatures. The study developed a checklist from preliminary checklist with 88 items based on Berrone, Surroca, and Tribo (2005), Haniffa and Hudaib (2007) and Roshima, Yuserrie and Hasnah (2009). In order to develop the checklist, the researchers also look on the definition of Islamic ethics defined by Khan (2009).