This study will bridge a gap between the three broad strands related to existing body of literature on disclosure (measures the disclosure; explores the determinants of disclosure and explores the consequences for disclosure). Consequently, the originality of this research explained based on the added value for each strand and how each study differs from previous literature as follows. To the first strand, this study differs from the previous studies that
exploring disclosure level that contain more than financial information (social and Sharia
disclosure). It differs from Abdul Rahman et al., 2010; Haniffa and Hudaib, 2007; Maali et al., 2006 as they are mainly measuring disclosure level for CSR. Moreover, this research differs based on Islamic banks that contained in the sample (Hassan et al., 2012 (13 banks); Sobhani et al., 2009 (29 banks), whereas this research sample is 117 banks. This study covers Islamic banks that located in 23 countries, whereas previous studies just focused on one country (e.g., Belal et al., 2014). The cross-countries level analysis permits me to construct a holistic picture about disclosure reporting for Islamic banks. This research index contains 25 dimensions of SSF area,
whereas previous studies covered less dimensions (e.g.,Abdul Rahman and Bukair, 2013; Hassan
and Harahap, 2010).
Moreover, this study differs from the previous studies that exploring the compliance level with AAOIFI (e.g., Ahmed and Khatun, 2013; Sarea and Hanefah, 2013; Vinnicombe, 2010). Sarea and Hanefah (2013) measured compliance with AAOIFI for banks that located only in Bahrain, whereas this study covers all Islamic banks that adopt AAOIFI across 8 countries. Ullah (2013) measures compliance with one standard of AAOIFI (accounting standard No.1), whereas this study measures compliance with several accounting and governance standards. Vinnicombe
(2010) measures compliance with AAOIFI based on 42 items for 4 dimensions, whereas this
study measures compliance with 229 items for 25 dimensions.
Concerned with the second strand, the research differs from the previous studies that explore
the determinants of disclosure that contains firm characteristics and CG mechanism variables. It
differs from Khan et al., (2013) and Farook et al., (2011)which tested the association between
CG and one dimension of disclosure which is CSRD, whereas this research investigates three categories of disclosure. The research model contains 10 CG variables as block holders,
ownership as well as board size, whereas previous research such as Hidalgo et al (2011),focused
on two CG variables which are Board independence and ownership structure. Gisbert and Navallas (2013); Samaha et al (2012) measured determinants of disclosure for banks that were located in one country (Egypt and Spain respectively), whereas this research explores this relationship for banks located in 23 countries. The current research therefore differs markedly from the previous studies based on sample size. This sample contains 117 IBs compared with Farook et al., (2011), which focused on 47 IBs. Moreover this work is focused on IBs, whereas other previous studies are testing this association for non-Islamic institutions (Liang et al., 2012). Tsamenyi et al (2007) measured impacts of CG on disclosure, whereas this study measures CG as well as firm characteristics. This research differs from other works that focused only on CG that related to BOD (e.g., Alhazaimeh et al., 2014; Elzahar and Hussainey, 2012; Cong and Freedman, 2011), while this study measures variables concerned with BOD and SSB in one model to see for what extent it effected disclosure levels.
To the third strand the previous studies focused on the impacts of increased disclosure on the cost of capital (Elzahar et al., 2015); analysts’ forecasts (Wang et al., 2013); financial performance (Wang et al., 2008); and share price anticipation of earnings (Hussainey and Walker, 2009). Secondly, the majority of these studies adopt disclosure index to explore the economic impacts of disclosure (Volkov and Smith, 2015; Moumen et al., 2015). This strand is focused mainly on the international firms and conventional banks in developed countries such as the UK (Elzahar
et al., 2015). There have been very few studies that measured the association between disclosure and FV (Uyar and Kilic, 2012). This strand is located in the early research stage for IBs. However, exploring these consequences has not yet been investigated empirically in Islamic banks based on
different kinds of disclosure, particularly Sharia and social. Moreover, related to the first strand,
rare studies measuring Sharia disclosure separately and measuring the impacts of this kind on FV.
The study is concerned with, but differs from, the work of Dhaliwal et al., (2011), in its examination of the impact of social disclosure on frim value. This study examines a broader concept of disclosure (SSF). This study differs from Richardson and Welker (2001), who examine the relation between the cost of capital and social as well as financial disclosure. This
study added a further form of disclosure which is Sharia disclosure. This research also differs
from prior research (Haniffa and Hudaib, 2007; Maali et al., 2006) based on a holistic disclosure index. The model is a unique and comprehensive means of measuring SSF categories of disclosure. This study is focused on Islamic banks whereas the previous studies focused on non-
Islamic firms (e.g., Elzahar et al., 2015; Dhaliwal et al., 2011). Moreover this research differs
from works of Wagner (2010); Dong et al., (2015), which explores the non-financial disclosure. This work contains financial and non-financial disclosure. Prior studies were limited to a single country or institution (Al-Mehmadi, 2004), but, my sample contains Islamic banks in 12 countries. This study differs from the outcomes of Wang et al., (2013); Moumen et al., (2015),
who explored the impact of disclosure on the cost of capital, share price andearnings forecasts,
whereas this study is focused on FV. Moumen et al (2015); Wang et al (2013) measured one category of disclosure which is risk, whereas this study measures different categories of disclosure. Furthermore, the previous studies in this strand focused on economic consequences, whereas – as far as I know- no study has explored the non-economic consequences for increased disclosure on the stakeholders’ loyalty as well as on trust and satisfaction.
Based on the originality of this study the current study contributes to the existing literature in the following seven distinct respects.
First, the present study explores, using firm-level analysis, the determinants of three different
disclosure types (Sharia, social and financial), with control national-level variables. While prior
literature provides mixed empirical evidence for social disclosure, no previous work has examined the other categories of disclosure. Also, previous literature provides mixed empirical evidence for variables related to firm characteristics and other concerned with CG, no previous
work has examined the existence of an in-house Sharia auditing department and CEO power,
and no previous studies have measured the impact of variables related to CG of SSB on the four types of disclosure. Prior disclosure research, therefore, is advanced by considering whether or not the firm-characteristics, CG mechanism for BOD and SSB and national-level variables has diverse impacts on the different categories of disclosure (SSF), rather than investigating associations between one type of disclosure as social and one type of variable generally (e.g., Kamla and Rammal, 2013; Hassan et al., 2012).
Second, three methods are applied to examine the association between the main variables and testing the models; OLS, descriptive statistics, Friedman test, and SEM and PLS. The first two approaches have been used frequently in prior research. The third approach (PLS) is first study to adopt this method for measuring the non-economic consequences of disclosure.
Third, previous work has applied manual content analysis to a one-year period within one country in addition to limited samples (e.g., Belal et al., 2014; Sobhani et al., 2009), while this
study contains a larger sample size (117 IBs) spread across more than 20 countries.
Fourth, there have been few empirical studies investigating the association between Sharia
disclosures and firm as well as national characteristics in the Islamic banking sector; this is the
first study that empirically investigates this association. Previous studies which investigated Sharia
disclosure are always added in the CSR index (e.g., Farook et al., 2011), while limited research
explores AAOIFI governance standards on compliance with Sharia. Therefore, this study is the
first one that distinguishes between SSBD from CSRD and measures the factors behind variances of disclosure level.
Fifth, the study of AAOFII standards has grown in recent years with substantial contributions from scholars such as Ahmed and Khatun (2013); Hassan and Harahap (2010). It is notable that the focus of most of these studies is descriptive in nature, emphasising in particular the compliance level with AAOIFI without extending their study to explore the main factors behind the disclosure level. This study is the first one to explore the determinants of disclosure concerned with firm factors and CG for most of IBs that have fully adopted AAOIFI standards.
Sixth, there have been rare empirical studies investigating the link between disclosure and financial performance in the banking sector (e.g., Servaes and Tamayo, 2013; Dhaliwal et al., 2011), as far as I know, this is the first study to empirically investigate this relationship in IBs.
Finally,there are several previous studies that measure the economic consequences of disclosure (Nekhili et al., 2015; Elzahar et al., 2015), while no previous work has examined the other consequences of disclosure. This research expands upon the work of previous studies exploring the consequences of disclosure through measuring the non-economic consequences of disclosure related to stakeholders’ behaviour (loyalty, trust and satisfaction).