Prelims

Half Title Page

Research in Corporate and Shariah Governance in the Muslim World

Title Page

Research in Corporate and Shari’ah Governance in the Muslim World: Theory and Practice

Edited By

Toseef Azid

Ali Abdullah Alnodel

and

Muhammad Azeem Qureshi

United Kingdom – North America – Japan India – Malaysia – China

Copyright Page

Emerald Publishing Limited

Howard House, Wagon Lane, Bingley BD16 1WA, UK

First edition 2019

Copyright © 2019 Emerald Publishing Limited

Reprints and permissions service

Contact: permissions@emeraldinsight.com

No part of this book may be reproduced, stored in a retrieval system, transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without either the prior written permission of the publisher or a licence permitting restricted copying issued in the UK by The Copyright Licensing Agency and in the USA by The Copyright Clearance Center. Any opinions expressed in the chapters are those of the authors. Whilst Emerald makes every effort to ensure the quality and accuracy of its content, Emerald makes no representation implied or otherwise, as to the chapters’ suitability and application and disclaims any warranties, express or implied, to their use.

British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library

ISBN: 978-1-78973-008-1 (Print)

ISBN: 978-1-78973-007-4 (Online)

ISBN: 978-1-78973-009-8 (Epub)

Contents

List of Figures

List of Tables

About the Editors

Toseef Azid is a Professor of Economics at College of Business and Economics, Qassim University, Saudi Arabia, and international visiting scholar, Economics Department, Wayne State University, Detroit, MI, USA. He holds PhD in Economics from the University College of Wales (UCW), Aberystwyth, UK (1993), and MSc in Economics from Quaid-i-Azam University, Islamabad, Pakistan (1979). He received COT Scholarship from the Government of Pakistan to study at UCW, overseas research scholarship from British government, and a Fulbright Award Scholar in Residence (2006), where he worked on a research project, ‘Economics of Middle Eastern Countries’. He was a Visiting Fellow at the Markfield Institute of Higher Education (MIHE), UK (2005–2006 and 2007), and then in 2012 he served as a Professor at MIHE. He taught in Pakistan, Brunei, United Kingdom, United States and Saudi Arabia. His research focusses on technological changes, development economics, labour economics, Islamic economics and Islamic finance. His recent book titled Labour in an Islamic Setting: Theory and Practice is published by Routledge, UK (2017). He has published more than 60 papers in local and international journals. He participated in several conferences held in Canada, Australia, United Kingdom, France, Iran, Saudi Arabia, Turkey, Indonesia, Malaysia, Bahrain, Qatar and Pakistan.

Ali Abdullah Alnodel is an Associate Professor at the College of Business and Economics, Qassim University, Saudi Arabia. He is a Vice Dean of Postgraduate and Research of the College of Business and Economics, Qassim University. He holds PhD in Accounting and Auditing from the University of Manchester, UK (2004), a Master’s in accounting from the University of Miami, USA (1998). He is a member of international and national accounting associations such as Colorado Board of Accountants, Saudi Organization for Certified Public Accountants, Saudi Accounting Association, and American Accounting Association. His research focusses on corporate governance, auditing, accounting and financial disclosure. His papers have been published in local and international journals. He presented his papers in different conferences held all over the world, for example, Saudi Arabia, Australia, United Kingdom and United States.

Muhammad Azeem Qureshi is an Associate Professor of Finance at Oslo Business School, Oslo Metropolitan University, Norway. He holds PhD in System Dynamics from the University of Bergen, Norway (2008), MPhil in System Dynamics from the University of Bergen, Norway (2004) and MBA from Bahauddin Zakariya University Multan, Pakistan (1989). He started his career as an Investment Banker in Pakistan. He also earned diploma in banking (DAIBP) during his over six years’ career as banker. Dr. Qureshi joined academia in Pakistan in 1997. In 2009, he moved to Norway at his current position where he teaches courses in corporate finance, international finance and managerial accounting to Norwegian as well as international students from across the globe. His research focusses on corporate finance, social economics, Islamic banking and finance. He has published several papers in international journals. He has also participated in several conferences held in the United States, Canada, Switzerland, the Netherlands, Spain, Italy, Norway, France, South Korea, Saudi Arabia, Qatar, Turkey, Malaysia and Pakistan.

List of Contributors

Mohammad Abdullah is a Shari’ah consultant based in Dubai. He earned his PhD and MA in Islamic Finance from the University of Gloucestershire, UK. Abdullah enjoys good academic interests in the fields of Islamic finance, Islamic microfinance and comparative studies of waqf (Islamic endowment) and English trust. He has published a number of academic papers in reputed international journals and has contributed few book chapters. Abdullah is a well-trained Shari’ah Scholar and is a graduate of Darul Uloom Nadwatul Ulama, India.

Shafiu I. Abdullah works with Sule Lamido University Kafin-Hausa, Jigawa state Nigeria. He has previously worked with Media Trust Abuja Nigeria and Intercontinental Bank Nigeria PLC. He has a Bachelor’s in Economics and a Master’s in Business Administration and Economics. He has published articles in journals, newspapers, as book chapters and conference proceedings. His research interests are in Islamic economics and finance, advertising, consumer theory, risk management and corporate governance. He won a writing award from the Nigerian Stock Exchange in 2003.

Abu Umar Faruq Ahmad is an Associate Professor in Islamic Economic Institute (IEI) at King Abdulaziz University, Jeddah. Prior to joining IEI he worked as Associate Professor at Universiti Brunei Darussalam; Senior Researcher with International Shari’ah Research Academy for Islamic Finance (ISRA); as Associate Professor at INCEIF, the Global University of Islamic Finance, Kuala Lumpur; and as Assistant Professor at Hamdan Bin Mohammad Smart University, Dubai; and. He holds LLM (Hons.); and PhD from Western Sydney University, Australia with High Distinction. He has several published books, chapters in edited books and refereed journal articles on Islamic economics and finance to his credit. He spoke at over 50 international conferences held in different parts of the globe. He is the Founding Chairman of the Shari’ah Supervisory Board of Islamic Cooperative Finance Australia (ICFA), and Shari’ah Audit Executive at Islamic Bank of Australia Project Sydney, Australia.

Tanveer Ahsan works as an Assistant Professor of Finance with Rennes School of Business, Rennes, France. He earned his PhD from School of Accounting, Dongbei University of Finance and Economics, Dalian, China. Earlier he earned his BBA (Hons.) and MBA in Finance from Institute of Management Sciences, Bahauddin Zakariya University, Multan, Pakistan. He served the same university for more than two years (2010–2012). His research interests are in corporate financing policies and panel data techniques. He has published numerous articles. His research focusses on different aspects of corporate financing policy.

Mohammad Nurul Alam is a Retired Professor of Accounting. He obtained his Doctorate degree on ‘Small Business Finance by Islamic Banks’ from Lund University, Sweden. He served as an Associate Professor of Accounting at the Canadian University of Dubai and at Sultan Qaboos University. He has been teaching PhD students as a Visiting Professor in the Department of Islamic Economics and Finance (IEF) at Trisakti University, West Jakarta, Indonesia. He worked as a Coordinator of ‘Fresh Start Program’ involved in teaching women in the region of Peel, Brampton, Canada.

Abdurrahman bin Abdulaziz Alaqil is an Assistant Professor at College of Shari’ah and Islamic Studies, Qassim University, Saudi Arabia. His research interest is sunnah and hadith. He holds PhD from Islamic University of Madinah, Saudi Arabia. He has published a number of articles in the academic journals. He is a Member of different Shari’ah Committees.

Mehmet Asutay is a Professor of Middle Eastern and Islamic Political Economy and Finance at the Durham University Business School and Director of the Durham Centre in Islamic Economics and Finance (UK). Mehmet’s teaching, research, publication and supervision of research are in Islamic moral economy, Islamic finance and banking, Islamic political economy, Islamic governance and management and the Middle Eastern political economies. His articles on his research interests have been published in various international academic journals and professional magazines. He has also published and edited books on aspects of Islamic moral economy and Islamic finance, the latest of which are Islamic Finance: Political Economy, Values and Innovation; Islamic Finance: Performance and Efficiency; and Islamic Finance: Risk, Stability and Growth (three volumes; Gerlach Press, 2015–2016).

Muhammad Ayub is Director of Research at Riphah International University Islamabad, Pakistan and Editor of Journal of Islamic Business and Management (JIBM). He is Non-resident Editor of AAOIFI’s Journal of Islamic Finance Accountancy (JOIFA) as well. He is also a Jurisconsult at the Federal Shariat Court of Pakistan. His unique contributions include ‘Islamic Banking Certificate Course’ being offered by SBP/NIBAF since 2005, and the textbook Understanding Islamic Finance (Wiley, 2007), which has been translated into Arabic, Malaya Bhasa, Turkish, Urdu and other languages.

Mohd Hairul Azrin Haji Besar is a Lecturer at the School of Business and Economics, Universiti Brunei Darussalam with research interests in the fields of accounting, financial reporting, governance and Islamic finance. He is currently an Alternate Member in the Brunei Shari’ah Financial Supervisory Board (SFSB). Dr Besar graduated with first-class honors in accounting and holds an MBA, specialising in Islamic Banking and Finance, from the International Islamic University Malaysia. He has been awarded PhD in Accounting and Finance from the University of Glasgow, UK.

Umar Burki is currently working as an Associate Professor in School of Business and Faculty of Social Sciences, University College of Southeast Norway, and Program Coordinator for Master’s in Innovation and Management. He holds two Master’s degrees in industrial logistics and economics and a PhD in business logistics from Molde University College, Norway. He has been published in several international academic journals, and has contributed conference papers related to B2B relationships, green innovations, supply chain management and international marketing.

Masudul Alam Choudhury is Adjunct Professor and International Chair of the post-graduate program in Islamic Economics and Finance, Trisakti University, Jakarta, Indonesia. He served as a Professor of Economics in Cape Breton University, Canada. He also served as Professor of Economics in Sultan Qaboos University, Muscat, Oman. Choudhury’s specialisation in the field of economics and finance is analytical methodology derived from the Qur’an and sunnah in the socio-scientific field with special focus on Islamic economics and finance studied from the Qur’anic worldview of monotheism. He earned his Master’s of Economics and PhD (Political Economy) from University of Toronto, Canada. He is Editor-in-Chief of Humanomics: International Journal of Systems and Ethics.

Sherif El-Halaby is an Academic Visitor at the University of Portsmouth. He has participated in more than 15 international conferences such as AAA and BAFA. He is working as a full-time Lecturer at the October University for Modern Sciences and Arts. He is also a part-time Lecturer at the Arab Academy for Science, Technology and Maritime Transport, Ahram Canadian University, Open Arab University and East London University, UK.

Yaser Ahmed Fallatah is an Assistant Professor of Accounting at the College of Industrial Management, King Fahd University of Petroleum and Minerals, Dhahran, Saudi Arabia. He presented his papers in different international conferences. He is also a Member of the American Accounting Association.

Abul Hassan Farooqi is a Research Scientist II/Associate Professor of Finance in King Fahd University of Petroleum and Minerals, Dhahran, Saudi Arabia. Earlier, he taught at the Markfield Institute of Higher Education (UK), Staffordshire University (UK) and the University of Brunei, Darussalam. He has published more than 30 papers in the areas of Finance, Islamic Economics and Finance. Recently, one of his book as a co-author entitled Islamic Finance: Ethical Underpinnings, Products, and Institutions (Hurricane Risk) is published by Macmillan (2018).

Rihab Grassa is an Auditor and Lecturer at the Higher Colleges of Technology in UAE and an External Associate Researcher for the Laboratoire Interdisciplinaire de Gestion Université - Enterprise in the High Institute of Accounting and Business Administration, University of Manouba, Tunisia. She is also a Board Member of the Tunisian Association for Islamic Finance. She has worked as a researcher/analyst in KPMG Global Islamic Finance in Dubai, and as a manager for Islamic finance services in KPMG Tunisia. She is currently working on a number of projects that will promote the development of Islamic finance in Middle East and North African countries.

Murya Habbash is an Associate Professor of Accounting at Administrative and Financial Sciences School, King Khalid University, Abha, Saudi Arabia. He holds PhD from the Durham University, UK in 2010, which focused on corporate governance and earnings quality. His current research interests include corporate governance, audit quality, corporate social responsibility and earnings quality. He has published a book and a number of research papers in academic journals. He also holds CPA-Saudi and CME qualifications. He is also a Board Member and Audit Committee Chairman in a Saudi-listed company.

The late Professor Sofyan Harahap served as a full-time Professor of Accounting in the Faculty of Economics, Trisakti University, Jakarta, Indonesia. Along with Professor Masudul Alam Choudhury, Sofyan Harahap was a co-founder of the now 19-year-old postgraduate program in Islamic Economics and Finance, Faculty of Economics, Trisakti University, Jakarta, Indonesia.

Zulkifli Hasan is an Associate Professor at the Faculty of Shari’ah and Law, Universiti Sains Islam Malaysia and also a Member of the Shari’ah Board of an Islamic bank in Malaysia. He has published numerous articles and books. He assisted the task force on corporate governance in Islamic financial institutions to develop corporate governance guidelines for IFIs in the Middle East and North Africa (MENA). He also assisted a task force on environmental, social and governance (ESG) to specifically introduce the S&P/Hawkamah Pan Arab ESG Index for listed companies in 11 MENA markets. His book entitled Shari’ah Governance in Islamic Banks is published by the Edinburgh University Press, UK (2012).

Mohammad Ziaul Hoque is a Retired Professor of Finance. He served as Assistant Professor of Finance at the Monash University Australia and the Sultan Qaboos University. He also served as an Operations Manager for Rahimafrooz Bangladesh Ltd., and a Manager at the Bangladesh Shilpa Bank. He earned his Master’s in Business Administration from the University of Sao Paolo/RMIT, Australia and PhD from the Victoria University, Melbourne, Australia. He is the Editor of Journal of Business and Policy Research. He has authored several books in Economics and Finance.

Khaled Hussainey is a Professor of Accounting and Financial Management at the Portsmouth University. He has been awarded the prestigious 2007 Best Paper Award of the British Accounting Review for his article ‘Loss Firms’ Annual Report Narratives and Share Price Anticipation of Earnings’, and the prestigious 2012 Best Paper Award of the Journal of Risk Finance for his article ‘Revisiting the Capital Structure Puzzle: UK Evidence’. He is currently a Co-editor-in-chief of Journal of Financial Reporting and Accounting; associate editor of Journal of Applied Accounting Research and International Journal of Accounting, Auditing and Performance Evaluation.

Mohd Adib Ismail is a Senior Lecturer at the Faculty of Economics and Management, Universiti Kebangsaan Malaysia (UKM). He has published several peer-reviewed papers in indexed journals along with book chapters in publications by known publishers. He completed his doctoral study in Economics from the International Islamic University of Malaysia in 2009. Prior to that, he obtained his Bachelor’s degree in Islamic Studies with concentration on Shari’ah and Economics from the University of Malaya, and Master’s degree in Economics from UKM. At UKM, he teaches Macroeconomics, Islamic Economics and fiqh.

Abdul Ghafar ismail is a Professor of Islamic financial economics at Johor Islamic Studies College. He has also served as the Head of the Research division, Islamic Research and Training Institute (IRTI), Islamic Development Bank (IDB) and as a Professor of Islamic Financial Economics at the Universiti Kebangsaan Malaysia. He has contributed many articles in scholarly journals and has published books as well as written individual chapters in several books.

Noor Suhaida Kasri is the Head of Islamic Capital Market Unit in International Shari’ah Research Academy for Islamic Finance (ISRA). She received her Doctor of Philosophy in Islamic Banking Finance and Management from the University of Gloucestershire (in collaboration with Markfield Institute of Higher Education), UK. Her Master’s in Law was from the King’s College of London. Her research interests are in law, regulation, social and ethical finance. She has written a number of research papers, articles and textbook chapters, and presented in conferences globally.

Hasan Kiaee earned his PhD in 2013 and Master’s in 2009 from the University of Tehran, Iran. He is working as an Assistant Professor of Economics at the Imam Sadiq University, Iran. His research focusses on Islamic Economics and Finance. In addition to publications, he actively participates in the Islamic banking and finance conferences inside and outside of Iran. He is also working as an Advisor for a number of banks and financial institutions in Iran.

Muhammad Iman Sastra Mihajat holds a LLB (Shari’ah) from the Al Azhar University Cairo, Egypt, Master’s in Finance ,and PhD in Islamic Banking and Finance (Institute of Islamic Banking and Finance, IIiBF) from the International Islamic University Malaysia (IIUM). He is the Head of Shari’ah, Al Yusr Islamic Banking – Oman Arab Bank. He is a Founder of iMan Institute of Islamic Finance (IIIF). He teaches in several well-known universities in Indonesia, such as Universitas Indonesia, Padjajaran University, Trisakti University, Islamic University of Syarif Hidayatullah, Al Azhar Indonesia University and Azzahra Islamic University.

Murniati Mukhlisin earned her Bachelor’s degree in Islamic Accounting from International Islamic University, Malaysia and PhD from the University of Glasgow, UK. She has taught at the University of Glasgow and Essex Business School, University of Essex, UK. Dr Mukhlisin works on critical perspective of research in the areas of financial reporting, Islamic accounting, Islamic banking and finance, and Islamic financial literacy. She is Rector at Tazkia University College of Islamic Economics, Bogor, Indonesia. Dr. Murniati Co-authored the best-selling book, Sakinah Finance (Tinta Medina, 2013), which is about Islamic family finance.

Haitham Nakhleh is an Assistant Professor of Business Administration at the College of Business and Economics, Qassim University, Saudi Arabia. He holds PhD in Business Management from the M.S. University, India, and Master’s in Commerce from the University of Mysore, India. Nakhleh’s research interests focus on various dimensions of business and technology, e-marketing, HRIS and different theories. His research papers have appeared in different national and international refereed journals.

Leny Nofianti earned her PhD from the Department of Accounting at University Padjadjaran in 2012. Currently, she is a Senior Lecturer in the Accounting Department and serves as Vice Dean of Finance and Administration in Economics and Social Science Faculty, State Islamic University Suska Riau, Indonesia. Her research focusses on governance, shari’ah governance, Islamic accounting and islamic banking and finance. She has carried out several research projects and published research papers in national and international publications.

Mohd Zakhiri Md Nor is a Senior Lecturer at the School of Law, Universiti Utara Malaysia. Currently, he is a Chairman of Shari’ah Advisory Board of Mizuho Bank and used to be Shari’ah Committee Member of Agrobank. He is also a Visiting Professor at the Islamic University of Maldives, Associate Member of the Association of Shari’ah Advisors in Islamic Finance Malaysia (ASAS), a Member of the Chartered Institute of Islamic Finance Professionals (CIIFP) and a Research Fellow at the Legal & Justice as well as the Syariah and Business Law Research Centre of Universiti Utara Malaysia. He holds PhD in Islamic Finance from INCEIF – the Global University of Islamic Finance.

Noor Aimi Mohamad Puad is a Lecturer at the Faculty of Management and Muamalah, Kolej Universiti Islam Antarabangsa Selangor (KUIS). She holds Bachelor degree in Accounting and Master of Science in Finance (Islamic banking) from the International Islamic University Malaysia (IIUM). Currently, she is pursuing her PhD at Institute of Islamic banking and Finance (IIBF), IIUM. She has expertise in accounting, Islamic banking and finance.

Shafiqur Rahman is a Faculty Member at Kent Institute, Sydney. He is also the Vice President of Australian Academy of Business Leadership. He served the US Embassy in dhaka as an Economic Specialist as well as a trade Promotions Manager. He also served as an MBA Coordinator for two private universities in Bangladesh. He holds a Phd in Management from the Macquarie University, Australia. He also received a Graduate Certificate in Research from Western Sydney University, and an MBA from iBA, dhaka University. He has published more than 15 papers in international journals, and presented papers in 20 international conferences.

Irum Saba is an Assistant Professor in the Department of Economics and Finance and Program Director of MS Islamic Banking and Finance at Institute of Business Administration (IBA), Karachi, Pakistan. She is also a Member of Grand Council of the Chartered Institute of Islamic Finance Professionals (CIIF), Malaysia. She is a Sub-editor of Journal of Islamic Finance Accountancy (JOIFA), AAOIFI, Bahrain, and Vice President of Asia Pacific Applied Economics Association (APEA), Australia. She earned her PhD from INCEIF. Her areas of interest are political economy, management, shari’ah, wealth planning and management, Islamic microfinance, corporate governance and Islamic finance.

Rose Ruziana Samad is a PhD Candidate at GS-Muamalat, Faculty Economics and Muamalat, USIM. She earned her Diploma in Banking and a Bachelor’s degree in Finance with Honors from the University Teknologi MARA. She completed her Master’s in Economics from the National University of Malaysia. She also holds IFP and RFP from the IBFIM. She was formerly a Lecturer in UiTM Johor and then continued her service as a Senior Lecturer in Economics and Finance at INTI International University Nilai. Her interests are in governance issues of cooperatives and shari’ah-based cooperatives.

Mohammad Saif Sarwar is a well trained Shari’ah Scholar. He holds Master’s in Islamic Banking and Finance from the University of Gloucestershire, UK, and a PG Diploma in Shari’ah sciences from the Mahdul Fatah, Damascus. He has worked as a Project Manager with Al Maali Consulting Group, Dubai. Prior to this, Mohammad has experience of working with UK-based Islamic finance consultancy IFAAS. He has published few academic papers on critical fiqhi issues of Islamic finance in different journals and Islamic finance magazines.

Muhammad Hakimi Mohd. Shafiai is a Senior Lecturer at the Universiti Kebangsaan Malaysia. He received his PhD (Islamic Economics) from the Graduate School of Asian and African Area Studies, Kyoto University, Japan. He has written a book entitled Islamic Finance for Agricultural Development, and has published several scholarly articles related to Islamic economics.

Zurina Shafii is an Associate Professor, Faculty of Economics and Muamalat and Research Fellow in Islamic Finance and Wealth Management Institute, Universiti Sains Islam Malaysia. Durham University (UK) awarded her Master’s and PhD degrees in Islamic finance. She has authored four books on Islamic financial planning, Shari’ah audit and Islamic finance. She has served at Durham University, the Islamic Research Training Institute of Islamic Development Bank and the Global Islamic Finance Development Centre, a research centre for the World Bank at Istanbul, and also in ASAFAS, Kyoto University, Japan.

Shahida Shahimi is an Associate Professor at the School of Economics, Faculty of Economics and Management, National University of Malaysia. She earned her PhD in Law from the University of Aberdeen, UK. She is an Editor of Jurnal Ekonomi Malaysia (JEM) and Malaysian Journal of Economics (Scopus-Indexed). She is also an Associate Research Fellow at the International Research Centre of Islamic Economics and Finance (IRCIEF), International Islamic University College Selangor (KUIS). Her major interests are in the fields of lslamic banking and finance, Islamic capital market, Islamic economics, social finance, waqf, sukuk and crowd-funding.

Salman Ahmed Shaikh is an Assistant Professor of Management Sciences at the SZABIST Karachi, Pakistan. He holds PhD in Economics from the National University of Malaysia. He has published several papers and book chapters on Islamic economics and finance. He has presented papers in international conferences in Turkey, Indonesia, Malaysia, Brunei and Pakistan. Over the years, he has worked from both the mainstream and the Islamic perspective on macroeconomics, development economics, public finance, corporate finance, investments and asset pricing.

Salah Al Shalhoob is an Assistant Professor and Director of the Centre of Research Excellence for Islamic Banking and Finance, King Fahd University of Petroleum and Minerals, Dhahran, Saudi Arabia. He earned his PhD in Islamic Finance and Law from the University of Edinburgh, UK. He is a well-renowned scholar of Islamic finance in Saudi Arabia.

Nadeem Ahmed Sheikh is an Associate Professor of Finance at the Institute of Management Sciences, Bahauddin Zakariya University, Multan, Pakistan. He earned his PhD (Business Administration) from the School of Management, Huazhong University of Science and Technology, Wuhan, China. He has published articles in national and international journals. One of his articles published in International Journal of Commerce and Management, ‘The Impact of Capital Structure on Performance: An Empirical Study of Non-Financial Listed Firms in Pakistan’ won a Highly Commended Paper Award in 2014. His research interests include capital structure, corporate governance, dividend policy, intellectual capital and working capital management.

Mohammad Soleimani received his MA degree in Islamic Studies and Economics from the Imam Sadiq University, Iran, and PhD in Economics from the Tarbiat Modares University, Tehran, Iran. He is an Assistant Professor in Islamic Science and Economics, in the Imam Sadiq University. His current research interests include financial economics and development economics. He has published articles in the areas of social capital, financial crisis and income distributions. He is the Author of policy papers in the Islamic Parliament Research Center of Iran in the area of Islamic Finance.

Rochania Ayu Yunanda is working as a Lecturer at the Sekolah Tinggi Ekonomi Islam Tazkia Bogor Indonesia since 2008. She has been a member of ISO team as Internal Auditor conducting monthly review and periodical audit on ISO compliance, and internal audit before surveillance audit by SAI Global. She earned her Master’s degree from International Islamic University Malaysia. She is now pursuing her PhD at the Universiti Sains Islam Malaysia. She has done some research on Islamic non-profit institutions and governance in waqf, particularly in waqf performance and waqf accounting and auditing.

Preface

Governance issues are of particular concern to Islamic financial institutions as it is crucial that they have appropriate governance structures to assure their clients and other stakeholders that their operations are shari’ah compliant. In this context the present study is a welcome addition to the growing literature on shari’ah governance, indeed it is the most comprehensive study to date, covering both structural and modelling issues, as well as presenting interesting country studies of shari’ah governance in Malaysia, Indonesia, Saudi Arabia, Oman, Bangladesh, Pakistan and Iran. These experiences are especially valuable as they provide a comparative perspective on the implementation of the best practices in Islamic corporate governance.

The relationship between the shari’ah board and the board of directors of Islamic financial institutions is a key issue, and much has been learnt from working practices in this area during the last four decades. Practical matters covered include policies for the appointment and retention of shari’ah board members. Although this was originally dealt within an informal manner, countries such as Malaysia have introduced detailed legislation to ensure that the best practices have legal foundations. Islamic law, of course, provides a framework for corporate and shari’ah governance, but as litigation involving Islamic financial institutions is dealt with under national law, it is helpful if law makers address the challenges that arise in applying commercial law to Islamic financial institutions. The book should be an essential reading for shari’ah scholars and those working for law firms dealing with Islamic financial institutions.

A whole part of the work deals with corporate governance from an Islamic audit and accounting perspective. The six chapters covering financial reporting standards for Islamic banks, takaful providers and other Islamic financial institutions are of particular value. There is a growing literature on Islamic accounting and auditing but this study, for the first time, has been focussed on corporate governance. Comprehensive financial reporting and detailed data analysis are crucial to ensure that Islamic financial institutions are sound with appropriate transparency for the benefit of shareholders and clients. As a matter of good practice, it is suggested that senior management remuneration should be in the public domain. Voluntary disclosure should be encouraged as a moral imperative and where provision for compulsory disclosure is absent because of inadequate commercial legal provisions.

A major strength of the book is that theory and practice are brought together. Questions that arise include whether Islamic corporate governance is driven by Islamic teaching, or rather if good practice is evidence based. In other words, there is a debate over whether the approach should be deductive, drawing on Islamic scholarship or inductive, by studying the behaviour of Islamic financial institutions. In reality, the two approaches are not exclusive; indeed, it can be argued they complement each other. The merit of this book is that the approach is multifaceted, with a comprehensive treatment of Islamic corporate governance issues.

Rodney Wilson

Emeritus Professor, Durham University, UK