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The influence of audit committee characteristics on the ethical disclosure of sharia compliant companies

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  • Peni Nugraheni
  • Syed Musa Alhabshi
  • Romzie Rosman

Abstract

The audit committee (AC) is an important mechanism within the corporate governance structure. Corporate misconduct and business failure have prompted greater scrutiny of the AC role. This study examines the effect of AC characteristics on disclosure, namely Islamic business conduct (IBC) disclosure, in sharia compliant companies (SCC) in Indonesia. SCC are expected to behave ethically and the AC can influence them by reviewing their internal control and stakeholder reporting systems. The study includes four AC characteristics as the independent variables, namely AC size, AC meeting frequency, AC gender diversity and AC expertise. The data were analysed using panel data regression. The samples comprised non-financial companies included in the Sharia Securities List on the Indonesia Stock Exchange for the years 2017–2020. The results show that the AC meeting variable had a positive effect on IBC disclosure. Meeting frequency can be used as a measurement of AC diligence, with the result showing that AC diligence in SCC can influence the disclosure of company ethical behaviour. The results of this study are expected to prompt Boards of Commissioners to encourage ACs to become more active in terms of undertaking more intense supervision and coordination so that the AC members can play a greater role in disclosing company information.

Suggested Citation

  • Peni Nugraheni & Syed Musa Alhabshi & Romzie Rosman, 2022. "The influence of audit committee characteristics on the ethical disclosure of sharia compliant companies," Cogent Business & Management, Taylor & Francis Journals, vol. 9(1), pages 2115220-211, December.
    • Handle: RePEc:taf:oabmxx:v:9:y:2022:i:1:p:2115220
    DOI: 10.1080/23311975.2022.2115220
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    Cited by:

    1. Alessandra Centinaio, 2024. "How gender diversity in boards affects disclosure? A literature review," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(3), pages 2352-2382, May.
    2. Haseeb Ur Rahman & Muhammad Zahid & Amin Jan & Mamdouh Abdulaziz Saleh Al‐Faryan & Khaled Hussainey, 2024. "Is it the mere female directors or their attributes that matter for the quality of corporate sustainability disclosures?," Business Strategy and the Environment, Wiley Blackwell, vol. 33(2), pages 661-678, February.

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