Characteristics of the shariah supervisory board and CSR performance: The case of selected Islamic banks in the GCC and Malaysia

This study empirically examines the effects of the characteristics of the Shariah supervisory board (SSB) on the level of Corporate Social Responsibility (CSR) disclosure by a total of 30 selected full-fledged Islamic banks in the Gulf Co-operation Council (GCC) countries and Malaysia for the year 2018. Islamic banks have, without a doubt proven to be very successful over the years, yet the question as to whether they have been able to achieve the Islamic economic ideals based on which they emerged remains to be answered. In this study, we investigate the role that the SSB characteristics play in the CSR performance of IBs. CSR disclosure is used as a proxy for CSR performance. Building on previous studies, we examined the effects that SSB characteristics such as the board size, the shariah background of its members, doctoral qualification in Shariah, the internationality of the board, and professional qualification has on the level of CSR disclosure by Islamic banks (IBs). Using multiple regression analysis, we found CSR disclosure to be positively and significantly influenced by larger SSB size, higher numbers of scholars with a doctoral qualification in Shariah/fiqh, and increased shariah knowledge of SSB members. A pair-wise ANOVA comparison between the GCC and Malaysia found no significant difference in the CSR disclosure levels between the two regions. However, the same comparison made between the GCC countries confirmed the presence of intra-regional differences vi in CSR disclosure. The descriptive analysis of CSR shows disclosure levels to be moderate (55%) in general, and critically low when it comes to voluntary disclosures. Keywords: CSR, AAOIFI, Shariah supervisory board