Corporate social reporting practices of Islamic banks in Indonesia : from the perceptions of different stakeholders

Abstract

Corporate social reporting is one of the famous issue in the development of financial reporting system. The modern company is not only focus on economic matters but also social matters in order to maintain the existence in the society. Islamic banking is the unique industry that concerning on the development of Islamic financial institutions which is promoting the social responsibility from Islamic perspective. Islamic banks use annual reports as a media to inform social activities to their stakeholders. Therefore, this study aims to investigate the corporate social reporting of Islamic banks in Indonesia particularly on the perceptions of the stakeholders regarding the practices of corporate social reporting from Islamic perspective. In Indonesia, studies regarding stakeholders’ perception on corporate social reporting from Islamic perspective particularly by Islamic banks are almost non-existence. Thus, providing solutions for study questions and presenting empirical evidence regarding corporate social reporting issues will certainly add a new dimension to the literature. This study examines the perceptions of selected stakeholders such as accountants of Islamic banks, members of Shar?’ah supervisory board, muslim accounting academicians, and customers of Islamic banks. This study adopts the questionnaire survey method to examine the perceptions of stakeholders on the practices of corporate social reporting from Islamic perspective by Islamic banks in Indonesia. The statistical analysis, both parametric and non-parametric, is used to measure the difference perceptions on several issues of corporate social reporting from Islamic perspective. The study found that the stakeholders of Islamic banks in Indonesia have positive responses and same views on corporate social reporting from Islamic perspective. Secondly, the stakeholders perceived that the spiritual and the social responsibility motivations have encouraged Islamic banks to disclose corporate social reporting from Islamic perspective. Thirdly, the stakeholders perceived that the lack of legal requirement, administrative difficulties, and not required by the accounting standards are some factors that discourage to disclose corporate social reporting from Islamic perspective. Fourthly, the stakeholders perceive that all information regarding corporate social reporting from Islamic perspective and also all potential users proposed in this study are important. Finally, this study may contribute to develop the awareness of the management of Islamic banks and the board of directors so as to promote the social responsibilities to the society and Muslim Ummah. This can strengthen the vision and mission of maqasid Shar?’ah through the practices of Islamic banks as the agent of change for other commercial institutions. Therefore, the reputation of Islamic banks will be better inline with the better commercial performance.