Corporate social responsibility disclosure and profitability: Evidence from Islamic banks working in Yemen
-
DOIhttp://dx.doi.org/10.21511/bbs.16(2).2021.09
-
Article InfoVolume 16 2021 , Issue #2, pp. 91-102
- Cited by
- 1125 Views
-
459 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
This study aims to examine the influence of corporate social responsibility (CSR) disclosure determinants on profitability of Yemeni Islamic financial institutions. The empirical study was based on a balanced panel for twelve years from 2005 to 2016. Banks’ profitability is measured by four indicators such as return on assets (ROA), return on equity (ROE), profit after tax (PAT), and earnings per share (EPS), while corporate social responsibility, financial leverage, inflation rate, asset size, and age of Islamic banks are considered as independent variables. The results of this study with regard to ROA indicated that corporate social responsibility, asset size, inflation rate, and age of Islamic banks have a significant influence on profitability (ROA). With respect to ROE, the result indicated that financial leverage, asset size, and inflation rate are the most important variables affecting bank profitability (ROE). Concerning PAT, the outcome revealed that financial leverage and age of Islamic banks have a significant effect on profitability (PAT). Finally, the result with respect to EPS indicated that financial leverage, asset size, inflation rate, and age of Islamic banks have a significant impact on bank profitability (EPS). The result will be beneficial to scholars, investors, stakeholders, managers, and policymakers in the Islamic financial sector.
- Keywords
-
JEL Classification (Paper profile tab)M14, M41, G21, L25
-
References32
-
Tables6
-
Figures0
-
- Table 1. Some empirical articles that examined the link between CSD and financial performance.
- Table 2. Measurement of variables
- Table 3. Descriptive analysis
- Table 4. Correlation analysis
- Table 5. ROA and ROE determinants
- Table 6. PAT and EPS determinants
-
- Al-Homaidi, E. A., Al-Matari, E. M., Tabash, M. I., Khaled, A. S. D., & Senan, N. A. M. (2021). The influence of corporate governance characteristics on profitability of Indian firms: An empirical investigation of firms listed on Bombay Stock Exchange. Investment Management and Financial Innovations, 18(1), 114-125.
- Al-Homaidi, E. A., Tabash, M. I., & Ahmad, A. (2020). The profitability of islamic banks and voluntary disclosure: empirical insights from Yemen. Cogent Economics and Finance, 8(1), 1-22.
- Amran, A., Fauzi, H., Purwanto, Y., Darus, F., Yusoff, H., Zain, M. M., Naim, D. M. A., & Nejati, M. (2017). Social responsibility disclosure in Islamic banks: a comparative study of Indonesia and Malaysia. Journal of Financial Reporting and Accounting, 15(1), 99-115.
- Barros, C. P., Boubaker, S., & Hamrouni, A. (2013). Corporate governance and voluntary disclosure in France. The Journal of Applied Business Research, 29(2), 561-578.
- Belal, A. R. (2008). Corporate social responsibility reporting in developing countries: The case of Bangladesh. London: Routledge.
- Bolanle, A. B., Adebiyi, S. O., & Muyideen, A. A. (2012). Corporate social responsibility and profitability of Nigeria Bbanks – A causal relationship. Research Journal of Finance and Accounting, 3(1), 6-18.
- Chen, Y. C., Hung, M., & Wang, Y. (2018). The effect of mandatory CSR disclosure on firm profitability and social externalities: Evidence from China. Journal of Accounting and Economics, 65(1), 169-190.
- Chiang, H., He, L.-J., & Shiao, C.-F. (2015). Financial reports quality and corporate social responsibility. Asian Economic and Financial Review, 5(3), 453-467.
- Farook, S., Hassan, M. K., & Lanis, R. (2011). Determinants of corporate social responsibility disclosure: the case of Islamic banks. Journal of Islamic Accounting and Business Research, 2(2), 114-141.
- Gunningham, N., Kagan, R. A., & Thornton, D. (2004). Social license and environmental protection: why businesses go beyond compliance. Law & Social Inquiry, 29(2), 307-341.
- Hassan, A., & Harahap, S. S. (2010). Exploring corporate social responsibility disclosure: the case of Islamic banks. International Journal of Islamic and Middle Eastern Finance and Management, 3(3), 203-227.
- Hawashe, A. A.-M. (2014). An evaluation of voluntary disclosure in the annual reports of commercial banks: Empirical evidence from Libya (Doctoral Thesis).
- Hopkins, M. (2004). Corporate social responsibility: an issues paper (Working Paper No. 27).
- Hossain, M. (2008). The extent of disclosure in annual reports of banking companies: The case of India. European Journal of Scientific Research, 23(4), 659-680.
- Hossain, M., & Hammami, H. (2009). Voluntary disclosure in the annual reports of an emerging country: The case of Qatar. Advances in Accounting, 25(2), 255-265.
- Lee, Y., & Yang, L. T. (2021). Corporate social responsibility and financial performance: a case study based in Taiwan. Applied Economics, 53(23), 2661-2670.
- Lin, L., Hung, P. H., Chou, D. W., & Lai, C. W. (2019). Financial performance and corporate social responsibility: Empirical evidence from Taiwan. Asia Pacific Management Review, 24(1), 61-71.
- Long, W., Li, S., Wu, H., & Song, X. (2020). Corporate social responsibility and financial performance: The roles of government intervention and market competition. Corporate Social Responsibility and Environmental Management, 27(2), 525-541.
- Maqbool, S., & Bakr, A. (2019). The curvilinear relationship between corporate social performance and financial performance. Journal of Global Responsibility, 10(1), 87-100.
- Maqbool, S., & Zamir, M. N. (2019). Corporate social responsibility reporting in India: A Study of SENSEX Companies. Management and Labour Studies, 44(2), 209-223.
- Mirfazli, E. (2008). Corporate social responsibility (CSR) information disclosure by annual reports of public companies listed at Indonesia Stock Exchange (IDX). International Journal of Islamic and Middle Eastern Finance and Management, 1(4), 275-284.
- Momin, M. A. (2006). Corporate social responsibility and reporting by multinational corporations in Bangladesh: an exploration (Ph.D. Thesis). University of Glasgow.
- Ompusunggu, J. (2016). The effect of profitability to the disclosure of corporate social responsibility (CSR disclosure) on mining companies listed on Indonesian Stock Exchange (BEI) in the Year 2010–2012. IOSR Journal of Business and Management (IOSR-JBM), 18(6), 69-78.
- Platonova, E., Asutay, M., Dixon, R., & Mohammad, S. (2016). The impact of corporate social responsibility disclosure on financial performance: evidence from the GCC Islamic Banking Sector. Journal of Business Ethics, 151(2), 451-471.
- Quazi, A., Nejati, M., & Amran, A. (2015). The CSR journey: looking through the evolutionary lens. In M. Nejati, A. Quazi, & A. Amran (Eds), Corporate Social Responsibility and Sustainability: Contemporary Perspectives. PEARSON, Kuala Lumpur.
- Rahman, A. A., & Bukair, A. A. (2013). The influence of the Sariah supervision board on corporate social responsibility disclosure by Islamic banks of Gulf Co-Operation Council Countries. Asian Journal of Business and Accounting, 6(2), 65-104.
- Ridwan, R., & Mayapada, A. G. (2020). Does sharia governance influence corporate social responsibility disclosure in Indonesia Islamic. Journal of Sustainable Finance & Investment, 2020, 1-20.
- Rodrguez, L. C., & Lemaster, J. (2007). Voluntary corporate social responsibility disclosure: SEC “CSR seal of approval.” Business and Society, 46(3), 370-384.
- Szegedi, K., Khan, Y., & Lentner, C. (2020). Corporate Social Responsibility and Financial Performance: Evidence from Pakistani Listed Banks. Sustainability, 12(10), 1-19.
- Tran, Q. T., Vo, T. D., & Le, X. T. (2021). Relationship between profitability and corporate social responsibility disclosure: Evidence from Vietnamese listed banks. Journal of Asian Finance, Economics and Business, 8(3), 875-883.
- Visser, W., Matten, D., Pohl, M., & Tolhurst, N. (2008). The A to Z of corporate social responsibility: The complete reference of concepts, codes and organization. John Wiley & Sons Ltd.
- Wuttichindanon, S. (2017). Corporate social responsibility disclosure d choices of report and its determinants: Empirical evidence from firms listed on the Stock Exchange of Thailand. Kasetsart Journal of Social Sciences, 38(2), 156-162.