Sharīʿah non-compliant income disclosures and the moral legitimacy strategies of Islamic banks
Journal of Islamic Accounting and Business Research
ISSN: 1759-0817
Article publication date: 16 August 2021
Issue publication date: 4 November 2021
Abstract
Purpose
The purpose of this study is to understand the reasons behind the different patterns of Sharīʿah non-compliant income (SNCI) disclosures amongst Islamic banks and, in particular, the extent to which Islamic banks make SNCI disclosures. The process involved in gaining and maintaining moral legitimacy forms the framework for this study.
Design/methodology/approach
Interviews were conducted with managers of Islamic banks involved in the reporting of SNCI in company annual reports.
Findings
The interview findings show that Islamic banks prefer to use procedures to gain and enhance moral legitimacy amongst their customers, business partners and staff. The constraints and challenges that Islamic banks face in SNCI reporting make this a popular means of securing moral legitimacy. However, these practices may not lead to enhanced and more communicative SNCI disclosures by Islamic banks.
Originality/value
To the best of the authors’ knowledge, this is the first study that explains the motivations behind SNCI reporting by Islamic banks and frames these motivations under the moral legitimacy framework.
Keywords
Acknowledgements
This research was supported by the Accounting Research Institute, 600-RMI/ARI_IRES 5/3 (55/2016).
Citation
Che Azmi, A., Rosman, R. and Omar, N. (2021), "Sharīʿah non-compliant income disclosures and the moral legitimacy strategies of Islamic banks", Journal of Islamic Accounting and Business Research, Vol. 12 No. 8, pp. 1146-1164. https://doi.org/10.1108/JIABR-09-2020-0287
Publisher
:Emerald Publishing Limited
Copyright © 2021, Emerald Publishing Limited