Does the adoption of AAOIFI affect corporate social responsibility disclosure? Evidence from Islamic banks

Abstract

In this study, we have investigated the impact of the implementation of AAOIFI (Accounting and Auditing Organization of Islamic Financial Institutions) on the level of corporate social responsibility disclosures (CSRD) within the context of Islamic banks. We measured the level of CSRD in annual reports using a disclosure instrument based on AAOIFI governance standard and other indexes from the previous studies. We have used data of 36 Islamic banks that was located in the Gulf Cooperation Council (GCC) between 2012 and 2016. We found out that AAOIFI adoption had a positive effect on CSRD. Furthermore, this paper - is the first one that has investigated to what extent adoption of financial accounting standards as AAOIFI can enhance the level of CSRD in Islamic banks. We contributed for the debate and literature about the economic consequences of adoption financial accounting standards specifically for Islamic