Publication: Corporate Social Responsibility Disclosure and Company Performance: A study of Islamic Banks in Malaysia
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Date
2021-11-11
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Universiti Sains Islam Malaysia
Abstract
The concept of social responsibility of Islamic banks has produced considerable interest in Malaysia in recent years. Prior research tends to focus on the relationship between corporate social responsibility and company performance has largely been based on international data, therefore this paper will focus on the Malaysia context. This study aims to explore the corporate social responsibility disclosure (CSRD) practices of the 10 Islamic banks in Malaysia during the period 2017-2018 and examines its impact on company performance. The paper develops a comprehensive CSR index for Islamic banks in Malaysia based on prior literature and AAOIFI, No7 2010 guidelines . The study applies ordinary least squares regression analysis to study the impact of respective dependent variables. The results show a significant negative relationship between CSR and company performance of Islamic Banks in Malaysia. The negative effect on firm performance could be driven by the content of the CSR information disclosed and how investors perceive it. There is a possibility that CSR information itself raises concerns about firm performance, which leads investors to lower their valuation. While CSR information could offer positive news to the stakeholders, they might misinterpret the practice that competitor firms would benefit from this excessive information. The findings imply the need for Islamic banks to strategically leverage the effect of CSRD on company performance. The finding of the study also provides an important implication for investors, managers, regulatory bodies, policymakers and Islamic banks in Malaysia.
Description
e-Proceedings of The 9th Islamic Banking, Accounting and Finance International Conference 2020 (iBAF2020)
“Navigating the New Normal in Islamic Finance and Wealth Management”
10th – 11th November 2020, Malaysia
Organized by: Faculty of Economics and Muamalat,USIM
Page: 123-133
Keywords
Corporate Social Responsibility Disclosure, company performance, Islamic Banks, Malaysia