Sharia Supervisory Boards, Governance Structures and Operational Risk Disclosures: Evidence from Islamic Banks in MENA Countries

44 Pages Posted: 31 Jul 2019

See all articles by Ahmed A. Elamer

Ahmed A. Elamer

Brunel University London - Brunel Business School; Department of Accounting, Faculty of Commerce, Mansoura University

Collins G. Ntim

University of Southampton Business School, UK; University of Southampton

Hussein Abdou

The Lancashire School of Business & Enterprise; Department of Management, Faculty of Commerce, Mansoura University

Chris Pyke

University of Central Lancashire - Lancashire School of Business and Enterprise

Date Written: July 27, 2019

Abstract

This paper examines the impact of Sharia supervisory board (SSB) and governance structures on the extent of operational risk disclosures (ORDs), using a sample of 63 Islamic banks from 10 (i.e., Bahrain, Egypt, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syria, and the UAE) countries in the Middle East and North Africa (MENA) region for the fiscal years 2006 to 2013. Drawing on Sharia compliance, Islamic banking and corporate governance literature, our findings are as follows. We find that SSB, block ownership, board independence, and country-level governance quality are statistically significant and positively associated with ORDs. Our results are robust when controlling for several bank- and country-level variables. Our study has implications for policy-makers and regulators in the MENA region with respect to the development and implementation of SSB and governance mechanisms that can improve operational risk disclosures. Finally, the findings highlight the need to enhance current understanding of SSB structures and governance mechanisms that can best help Islamic banks towards engaging in effective compliance with recent governance and accounting reforms.

Keywords: Operational Risk Disclosure; Sharia supervisory board; Corporate Governance; Country Governance; Islamic Banks; MENA countries

Suggested Citation

Elamer, Ahmed Ahmed and Ntim, Collins G. and Abdou, Hussein and Pyke, Chris, Sharia Supervisory Boards, Governance Structures and Operational Risk Disclosures: Evidence from Islamic Banks in MENA Countries (July 27, 2019). Global Finance Journal, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3427665

Ahmed Ahmed Elamer (Contact Author)

Brunel University London - Brunel Business School ( email )

Kingston Lane
Eastern Gateway Building
Uxbridge, Middlesex UB8 3PH
United Kingdom

Department of Accounting, Faculty of Commerce, Mansoura University ( email )

Faculty of Commerce, Mansoura University
Elgomhouria St.
Mansoura, Mansoura 35516
Egypt

Collins G. Ntim

University of Southampton Business School, UK ( email )

Southampton Business School
Highfield
Southampton, England SO17 IBJ
United Kingdom
+44 (0) 238059 4285 (Phone)
+44 (0) 238059 3844 (Fax)

HOME PAGE: http://www.southampton.ac.uk/business-school/about/staff/cgn1n11.page

University of Southampton ( email )

Southampton, SO17 1BJ
United Kingdom

Hussein Abdou

The Lancashire School of Business & Enterprise ( email )

The Lancashire Law School
Corporation Street
Preston, PR1 2HE
United Kingdom
00441772894700 (Phone)

Department of Management, Faculty of Commerce, Mansoura University ( email )

Mansoura, 35516
Egypt

Chris Pyke

University of Central Lancashire - Lancashire School of Business and Enterprise ( email )

Preston, PR1 2HE
United Kingdom

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