On intellectual capital efficiency and shariah governance in Islamic banking business model

This paper empirically investigates whether intellectual capital (IC) and shariah governance jointly affect the economic performance of Islamic banks (IBs). In contrast to prior research, this paper disaggregate IC and corporate governance features and examine whether the two are jointly related to economic performance. These relationships are further explored before, during and after the financial crisis based on a sample of 64 Islamic banks operating in different regions during the period 2007–2014. The required data to calculate different constituents of IC efficiency and governance mechanism is hand collected from 512 annual reports. After controlling for other corporate governance and bank‐specific characteristics (operational type, bank size, listing status, risk, type of auditor, accounting standard and region), we find both intellectual capital efficiency and shariah governance proxies (size and dominance of prominent scholars of shariah supervisory board) to have a significant positive relationship with accounting measure of performance. However, based on market performance measure, only one proxy for shariah governance mechanism, that is, prominent scholars on SSB, is found to be significant but in the negative direction. These results provide important insights into the relationship between IC efficiency, corporate governance and performance in Islamic banking business model and have policy and practical implications

Committee on board: Does it matter? A study of Indonesian Sharia-listed firms

© 2017 The Author(s). The committee on board includes audit committee and nomination committee that currently has been questioned as to whether the firm value is also affected by the committees’ performance that has been the subject of attention. Apparently, this study is the first to attempt providing an evidence of committees’ role on to the extent of its contribution to firm value in the context of Indonesian Sharia-listed firms as the establishment of Islamic-compliance firms is currently experiencing an upward trend in many countries. Hence it is enticing to examine the impact of committee on board as part of corporate governance mechanisms on firm value in the Indonesian Sharia-listed firms. Using an Indonesian Sharia-listed firms which counts for 30 firms in the quarterly period of 2009 to 2015, this study employs a 720 balanced panel, using Generalized Least Square. The results reveal that the audit committee and the nomination committee have a significant impact on firm value (Tobin’s Q). The non-significant result for ROA suggesting that the mixed measured of book and market is viewed more reliable for investors as it indicates the overall performance measure. Meanwhile the result of the number of audit committee meeting yielded no significant impact on firm value; this may be due to no restrictions on the number of positions of audit committee serves in firms, therefore, the auditor may be manifold in some companies which can be overlapping. Further, the number of audit committee only meets the regulations and yet the transparency is still far beyond

Internal Auditor Perceptions on Audit Committee Interactions: a qualitative study in Malaysian public corporations

Audit committees (AC) and the internal audit function (IAF) are two key corporate governance mechanisms. The primary objective of this study is to provide insights into internal auditors' perceptions of their interactions with AC members in Malaysia. The paper thus contributes to the extant literature by providing additional evidence from a South-east Asian country which is recognised as being characterised with a high power distance culture and a developing capital market. The findings are based on in-depth interviews of the heads of the internal audit function (HIAFs) from 11 publicly listed companies. The results indicate infrequent informal communications and limited private meetings between the HIAFs and ACs, and a need for clear reporting lines. Further, ACs are seen to be held in high esteem for their authority and are expected to take on greater leadership in the inquiry of management's decision-making. These findings highlight the importance of the leadership role of ACs in supporting the IAF. Copyright (c) 2007 The Authors; Journal compilation (c) 2007 Blackwell Publishing Ltd.