Testing a Model of Islamic Corporate Financial Report
Testing A Model of Islamic Corporate Financial Reports : Some Experimental Evidence
1. Introduction
Religion can exert a profound influence on individuals and societies. There has been a growing religious commitment during the past two decades which has led to more Muslim countries seeking to manage their economies in line with the precepts of Islam (Hassan, 1998).
Central issue in Islamic accounting is weather the external financial reporting system currently adopted by Muslim countries serves the needs of Muslims. Baydoun and Willett (1994 and 2000) who argued that the influence of Islam on accounting was more likely to be in the disclosure aspect of accounting proposed a model of Islamic Corporate Financial Reports. Their model, based on what Muslims ought to desire, need to investigate if such model is aligned with what Muslims actually regard as useful information.
Maliah Sulaiman (1998) tested the model & found that the results from the survey were all non-significant, indicating no support for Baydoun and Willett’s conceptual model. Further study by (Brownell, 1995) states that non-significant results is weak due to leniency, acquiescence, halo and partitioning errors.
2. Islamic Corporate Reporting: The Model
The stance of Baydoun & Willett’s (1994 & 2000) model is Western accounting system capitalist is different with teachings of Islam. Capitalistic system gives pre-eminence to the profit and loss. An Islamic economy focus for growth should lead to social justice and a more equitable distribution of power and wealth.
Concepts of ownership and private property in Islam have different connotations from those prevalent in the West because for Muslims, ownership of wealth is not absolute, individuals are only trustees. Ultimate ownerships belong to Allah (SWT). The Islamic social order is based on the principles of equality, justice and brotherhood and the concept of freedom and responsibility (al-Buraey, 1990).
Two principles underlie
1. Introduction
Religion can exert a profound influence on individuals and societies. There has been a growing religious commitment during the past two decades which has led to more Muslim countries seeking to manage their economies in line with the precepts of Islam (Hassan, 1998).
Central issue in Islamic accounting is weather the external financial reporting system currently adopted by Muslim countries serves the needs of Muslims. Baydoun and Willett (1994 and 2000) who argued that the influence of Islam on accounting was more likely to be in the disclosure aspect of accounting proposed a model of Islamic Corporate Financial Reports. Their model, based on what Muslims ought to desire, need to investigate if such model is aligned with what Muslims actually regard as useful information.
Maliah Sulaiman (1998) tested the model & found that the results from the survey were all non-significant, indicating no support for Baydoun and Willett’s conceptual model. Further study by (Brownell, 1995) states that non-significant results is weak due to leniency, acquiescence, halo and partitioning errors.
2. Islamic Corporate Reporting: The Model
The stance of Baydoun & Willett’s (1994 & 2000) model is Western accounting system capitalist is different with teachings of Islam. Capitalistic system gives pre-eminence to the profit and loss. An Islamic economy focus for growth should lead to social justice and a more equitable distribution of power and wealth.
Concepts of ownership and private property in Islam have different connotations from those prevalent in the West because for Muslims, ownership of wealth is not absolute, individuals are only trustees. Ultimate ownerships belong to Allah (SWT). The Islamic social order is based on the principles of equality, justice and brotherhood and the concept of freedom and responsibility (al-Buraey, 1990).
Two principles underlie