UPSI Digital Repository (UDRep)
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Abstract : Universiti Pendidikan Sultan Idris |
Shariah governance framework has been established by the Bank Negara of Malaysia
(BNM) to ensure an effective Shariah governance among the Islamic Financial
Institutions in Malaysia. Nevertheless, since its implementation in 2010 the financial
performance of the institutions is in doubt due to financial crisis and fraudulent acts that
have been triggered worldwide. Hence, the confidence level of the shareholders and
stakeholders towards the institutions is at stake. In addition, due to the lack of
understanding of the Shariah governance requirements and unclear roles among the
shareholders shall lead to poor disclosure and Shariah non-compliant issues. Therefore,
this study is to identify the level of disclosure of Shariah governance characteristics,
examine the relationship between Board characteristics (Board size and Non-executive
directors) and the Shariah governance characteristics and disclosures (Shariah
committee, Shariah committee report, Shariah board meeting, Shariah audit, Shariah
review, and Shariah risk management) towards Islamic financial institutions
performance using return on assets and return on equity. There are 16 Islamic banks
listed in the BNM and these banks are chosen as a sample for this study for 10
consecutive years from 2010 to 2019 by reviewing the banks’ annual reports. It is a
longitudinal study looking at events during and after the implementation of the Shariah
Governance Framework from 2010 onwards and the results of finding are being
analysed using E-view software 10.0 version. Findings were found that the size of the
Shariah committee, Shariah committee report, Shariah committee meeting, Shariah risk
management, Board size, and non-executive directors are significantly associated with
firm performance. This study shall give impacts on the policymakers such as the
government and BNM, the functions of the board and committees of the banks, and
theoretically on the additional literature review to ensure the Shariah governance
disclosure can be further strengthened. |
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