Sustainability Reporting and Firm Perfomance Based On Maqashid Sharia Perspective

Reza  Meydinda Usman; Nurika  Restuningdiah; Dodik  Juliardi

doi:10.46729/ijstm.v6i3.1318

Reza Meydinda Usman Department of Accounting, State University of Malang, Indonesia
Nurika Restuningdiah Department of Accounting, State University of Malang, Indonesia
Dodik Juliardi Department of Accounting, State University of Malang, Indonesia

DOI: https://doi.org/10.46729/ijstm.v6i3.1318

Keywords: Department of Accounting, State University of Malang, Indonesia

Abstract

This study aims to determine the effect of disclosure of sustainability reporting on company performance based on maqashid sharia perspective in sharia stock indexed companies in Indonesia. The study obtained a sample of 52 companies in the mining, property & real estate, energy, and basic industry & chemicals sectors listed in the Indonesian Sharia Stock Index (ISSI) during 2022-2023, resulting in 104 observations through purposive sampling. The data analysis technique was conducted using documentation methods, specifically by collecting annual report data and sustainability reports from the sample companies. The analysis was performed using multiple regression with E-Views 13 software. Based on the research results, the Sustainability Reporting does not have a statistically significant effect on the Maqashid Syariah Index. This research indicates that companies listed in the Indonesian Sharia Stock Index, although they have demonstrated concern for environmental issues and social interests through sustainability reporting, have not yet fully integrated the principles of Maqashid Sharia into their operational practices in an optimal manner.

Downloads

Download data is not yet available.

References

S. Aisyah, B. Hariadi, and E. Mardiati, “The effect of Islamic intellectual capital, corporate governance, and corporate social responsibility disclosure on maqashid sharia performance, with reputation as a moderating variable,” Int. J. Res. Bus. Soc. Sci. (2147- 4478), vol. 10, no. 4, pp. 75–84, 2021, doi: 10.20525/ijrbs.v10i4.1233.

H. B. Jaiyeoba, M. A. Jamaludin, S. A. Busari, and Y. J. Amuda, “The implications of Maqasid al-Shari’ah for integrated sustainability practices among businesses: a qualitative inquiry,” Qual. Res. Financ. Mark., vol. ahead-of-print, no. ahead-of-print, 2024, doi: 10.1108/QRFM-09-2023-0222/FULL/PDF.

F. A. Mohd Zain, S. F. Muhamad, H. Abdullah, S. A. F. Sheikh Ahmad Tajuddin, and W. A. Wan Abdullah, “Integrating environmental, social and governance (ESG) principles with Maqasid al-Shariah: a blueprint for sustainable takaful operations,” Int. J. Islam. Middle East. Financ. Manag., vol. 17, no. 3, pp. 461–484, 2024, doi: 10.1108/IMEFM-11-2023-0422.

T. Al-Mubarak and N. M. Osmani, “Applications of Maqasid al-Shari?ah and Maslahah in Islamic Banking practices: an analysis,” Int. Semin. Islam. Financ. India, 2010, [Online]. Available: http://irep.iium.edu.my/4251/

F. Rosati and L. G. D. Faria, “Addressing the SDGs in sustainability reports: The relationship with institutional factors,” J. Clean. Prod., vol. 215, pp. 1312–1326, Apr. 2019, doi: 10.1016/J.JCLEPRO.2018.12.107.

P. Ludwig and R. Sassen, “Which internal corporate governance mechanisms drive corporate sustainability?,” J. Environ. Manage., vol. 301, p. 113780, Jan. 2022, doi: 10.1016/J.JENVMAN.2021.113780.

P. N. Githaiga and J. K. Kosgei, “Board characteristics and sustainability reporting: A case of listed firms in East Africa,” Corp. Gov., vol. 23, no. 1, pp. 3–17, 2022.

A. Buallay, “Is sustainability reporting (ESG) associated with performance? Evidence from the European banking sector,” Manag. Environ. Qual. An Int. J., vol. 30, no. 1, pp. 98–115, 2019, doi: 10.1108/MEQ-12-2017-0149.

T. Julia, K. Salina, and E. A. Engku Rabiah Adawiah, “Are the Green Projects in Line with the Maqasid Shariah? An Assessment of Green Firms in Bangladesh,” Glob. Conf. Islam. Econ. Financ. 2018, no. October, pp. 317–335, 2018.

F. K. Rahman, M. A. Tareq, R. A. Yunanda, and A. Mahdzir, “Maqashid Al-Shari’ah-based performance measurement for the halal industry,” Humanomics, vol. 33, no. 3, pp. 357–370, 2017, doi: 10.1108/H-03-2017-0054.

OJK, “Roadmap Pasar Modal Syariah 2020-2024,” 2020.

D. Lusyana and M. Sherif, “Shariah-compliant investments and stock returns: evidence from the Indonesian stock market,” J. Islam. Account. Bus. Res., vol. 8, no. 2, pp. 143–160, 2017, doi: 10.1108/JIABR-10-2015-0052/FULL/PDF.

O. Farooq and A. Alahkam, “Performance of shariah-compliant firms and non-shariah-compliant firms in the MENA region: Which is better?,” J. Islam. Account. Bus. Res., vol. 7, no. 4, pp. 268–281, 2016, doi: 10.1108/JIABR-10-2013-0039/FULL/PDF.

O. Farooq and A. AbdelBari, “Earnings management behaviour of Shariah-compliant firms and non-Shariah-compliant firms: Evidence from the MENA region,” J. Islam. Account. Bus. Res., vol. 6, no. 2, pp. 173–188, Sep. 2015, doi: 10.1108/JIABR-07-2013-0021/FULL/PDF.

A. A. Daryaei and Y. Fattahi, “The asymmetric impact of institutional ownership on firm performance: panel smooth transition regression model,” Corp. Gov., vol. 20, no. 7, pp. 1191–1203, 2020, doi: 10.1108/CG-06-2020-0254.

A. A. Lahjie, R. Natoli, and S. Zuhair, “The effect of corporate governance, corporate social responsibility and information asymmetry on the value of Indonesian-listed firms,” Int. J. Account. Inf. Manag., vol. 31, no. 5, pp. 785–807, 2023, doi: 10.1108/IJAIM-02-2023-0038.

A. Y. Al Hawaj and A. M. Buallay, “A worldwide sectorial analysis of sustainability reporting and its impact on firm performance,” J. Sustain. Financ. Invest., vol. 12, no. 1, pp. 62–86, 2022, doi: 10.1080/20430795.2021.1903792.

A. Buallay, “Sustainability reporting and firm’s performance: Comparative study between manufacturing and banking sectors,” Int. J. Product. Perform. Manag., vol. 69, no. 3, pp. 431–445, 2020, doi: 10.1108/IJPPM-10-2018-0371.

M. K. Shad, F. W. Lai, C. L. Fatt, J. J. Klemeš, and A. Bokhari, “Integrating sustainability reporting into enterprise risk management and its relationship with business performance: A conceptual framework,” J. Clean. Prod., vol. 208, pp. 415–425, 2019, doi: 10.1016/j.jclepro.2018.10.120.

N. Laskar and S. Gopal Maji, “Disclosure of corporate sustainability performance and firm performance in Asia,” Asian Rev. Account., vol. 26, no. 4, pp. 414–443, 2018, doi: 10.1108/ARA-02-2017-0029.

R. R. Aroul, S. Sabherwal, and S. V. Villupuram, “ESG, operational efficiency and operational performance: evidence from Real Estate Investment Trusts,” Manag. Financ., vol. 48, no. 8, pp. 1206–1220, 2022, doi: 10.1108/MF-12-2021-0593.

M. Carvajal and M. Nadeem, “Financially material sustainability reporting and firm performance in New Zealand,” Meditari Account. Res., vol. 31, no. 4, pp. 938–969, 2023, doi: 10.1108/MEDAR-06-2021-1346.

I. Khanchel, N. Lassoued, and I. Baccar, “Sustainability and firm performance: the role of environmental, social and governance disclosure and green innovation,” Manag. Decis., vol. 61, no. 9, pp. 2720–2739, 2023, doi: 10.1108/MD-09-2021-1252.

R. M. N. C. Swarnapali, “Consequences of corporate sustainability reporting: evidence from an emerging market,” Int. J. Law Manag., vol. 62, no. 3, pp. 243–265, 2020, doi: 10.1108/IJLMA-12-2017-0294.

S. Fosu, A. Danso, W. Ahmad, and W. Coffie, “Information asymmetry, leverage and firm value: Do crisis and growth matter?,” Int. Rev. Financ. Anal., vol. 46, pp. 140–150, 2016, doi: 10.1016/j.irfa.2016.05.002.

W. Gao and F. Zhu, “Information Asymmetry and Capital Structure Around the World,” SSRN Electron. J., no. August 2012, 2012, doi: 10.2139/ssrn.2126451.

T. L. D. Huynh, J. Wu, and A. T. Duong, “Information Asymmetry and firm value : Is Vietnam different ?,” J. Econ. Asymmetries, vol. 21, 2019, doi: 10.1016/j.jeca.2019.e00147.

E. Setiany and D. Suhardjanto, “Disclosure, information asymmetry and the cost of equity capital: Evidence from indonesia,” Int. Symp. Econ. Theory Econom., vol. 28, pp. 351–366, 2021, doi: 10.1108/S1571-038620210000028020/FULL/XML.

S. R. Ascarya and R. Sukmana, “Modeling islamic financial institution performance measurement based on Maqashid Al-Shariah,” yogyakarta, 2014.

M. S. Antonio, M. Taufiq, and T. Irawan, “Shariah Enterprise Theory: A Theoretical Approach,” Int. J. Islam. Middle East. Financ. Manag., vol. 5, no. 3, pp. 223–242, 2012.

B. Maali, P. Casson, and C. Napier, “Social Reporting by Islamic Banks,” Abacus, vol. 422, no. 2, pp. 266–289, 2006.

I. Triyuwono, Perspektif, Metodologi, dan Teori Akuntansi Syariah. Jakarta: PT RajaGrafindo Persada, 2009.

A. Buallay, “Between cost and value: Investigating the effects of sustainability reporting on a firm’s performance,” J. Appl. Account. Res., vol. 20, no. 4, pp. 481–496, 2019, doi: 10.1108/JAAR-12-2017-0137.

H. Yusoff, F. Darus, and A. Amran, “Islamic Corporate Social Reporting : Perspective of Makasid Al Shariah,” J. Islam. Econ. Bank. Financ., vol. 11, no. 1, pp. 93–121, 2015, doi: 10.12816/0026020.

Global Reporting Initiative, “GRI 1 - Landasan 2021,” Globalreporting.Org. [Online]. Available: https://www.globalreporting.org/how-to-use-the-gri-standards/gri-standards-bahasa-indonesia-translations/

M. . Mohammed and D. A. Razak, “Theperformance measures of Islamic banking based on the on the maqasid framework,” 2008.

M. Abu Zahra, Usul al-Fiqh. Cairo: Dar al-Fikr al-‘Arabi, 1958.

M. O. Mohammed, D. A. Razak, and F. M. Taib, “The Performance Measures of Islamic Banking Based on the Maqasid Framework,” 2015, Accessed: Oct. 01, 2024. [Online]. Available: http://www.atimes.com/atimes/Global_Economy/FH20Dj02.html

A. Arini, S. N. Maharani, and D. Juliardi, “The Impact of The Sustainability Report on The Performance of Maqashid Sharia Islamic Commercial Banks in Indonesia,” Int. J. Tour. Hosp. Asia Pasific, vol. 3, no. 3, pp. 96–103, 2020, doi: 10.32535/ijthap.v3i3.958.

Sonhaji, I. Triyuwono, A. Djamhuri, and A. D. Mulawarman, “the Construction of Sharia Management Accounting Objectives: Reaching Liqaa-a Rabb and Maqashid Syariah,” 2018, cyberleninka.ru. doi: 10.18551/rjoas.2018-05.24.