Title: A review of the characteristics of corporate and Shariah governance mechanisms and earnings quality

Authors: Siti Fariha Muhamad; Zunaidah Sulong

Addresses: Faculty of Entrepreneurship and Business, Universiti Malaysia Kelantan, City Campus, Locked Bag 36, Pengkalan Chepa, 16100 Kota Bharu, Kelantan, Malaysia ' Faculty of Economics and Management Sciences, Universiti Sultan Zainal Abidin, Gong Badak Campus, Gong Badak, 21300 Kuala Terengganu, Terengganu, Malaysia

Abstract: This paper aims to present a review of past literature on Shariah governance's regulatory frameworks, characteristics of mechanisms and relationship with financial reporting quality focusing on earnings quality. This paper specifically examines cross-country empirical studies. The different types of Shariah governance regulatory frameworks in various countries that operate Islamic banking were identified. A synthesis of empirical findings demonstrated that characteristics of corporate and Shariah governance in Islamic banking have been examined in relation to performance, efficiency, risk behaviour and earnings quality. The board of directors (BOD) and Shariah supervisory board (SSB) are the most examined mechanisms. Besides, the measurements of earnings quality have been proxied by discretionary accrual, loan loss provision and earnings loss avoidance. It is concluded that the presence of Shariah governance have impacted the managerial behaviour and quality of financial reporting of Islamic banks.

Keywords: corporate governance; Shariah governance; Islamic banks; corporate governance characteristics; earnings quality.

DOI: 10.1504/IJCA.2018.098266

International Journal of Critical Accounting, 2018 Vol.10 No.6, pp.447 - 461

Received: 08 Feb 2018
Accepted: 14 Aug 2018
Published online: 07 Mar 2019 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article