Islamic Social Reporting Of Listed Companies In Malaysia

Abstract

The resurgence of Islam to a loftier pedestal as a way of life opened up an additional dimension to financial reporting to stakeholders.  Muslim decision-makers expect corporations to include additional information in their reports to enable them to exercise prudence, both from economics and Islamic jurisprudence point of views.  Based on the Islamic theoretical foundation of social accountability and full disclosure, Muslim business owners - or in this study, the shariah-approved companies, must prove that they are operating under Islamic laws. The Islamic capital market has developed at such a rapid pace that the shariah-approved companies are beginning to present a religious aspect to their financial statements by disclosing the fulfilment of its obligations in line with the shariah, like zakat, sadaqa, wages and compensation, and the conduct of business activities within a halal environment; hence, the need for Islamic Social Reporting (ISR).  This study attempted to measure the extent of ISR as practiced by shariah-approved Malaysian companies listed in Bursa Malaysia in their annual reports.  The study led to a conclusion on the degree of accountability on the part of the companies by way of their conformity to shariah.  Based on the descriptive statistics of the disclosure index, it can be concluded that the extent of ISR in the annual report of selected companies is considered minimal.