Emerald | Journal of Islamic Accounting and Business Research | Table of Contents

Antecedents of zakat payers' trust in an emerging zakat sector: an exploratory study

Fri, 12 Apr 2013 00:00:00 +0100

Abstract

Purpose – The purpose of this paper is to investigate and explain the factors underlying the inclination of zakat payers to trust a particular zakat institution. Design/methodology/approach – Based on the literature review and experience survey, a context specific questionnaire was developed as the main method of quantitative data collection. The instrument was administered to a sample of Muslim professionals who observe religious seclusion in the last ten days of the Islamic fasting month (itqaf) in 12 purposely selected mosques across four states and the federal capital territory. Findings – Drawn from the resource dependence and legitimacy theories, the study finds that board capital, disclosure practices, governmental model of zakat institution, and stakeholder management were identified through the use of structural equation modeling as being the antecedents of zakat payers' trust. Originality/value – This paper is the first to report an empirically based model of zakat payers' trust.

Determinants of demand on family Takaful in Malaysia

literatinetwork@emeraldinsight.com (Mohamed Sherif, Nor Azlina Shaairi) — Fri, 12 Apr 2013 00:00:00 +0100

Abstract

Purpose – The purpose of this paper is to identify the driving forces that influence family Takaful demand in Malaysia. The paper examines various identified and available economics and socio-demographic variables. Design/methodology/approach – Using ordinary least square (OLS) and generalised method of moments (GMM) techniques, the paper investigates the significance of the identified economic and socio-demographic factors in determining the consumption of family Takaful. The paper first examines a full model that combines all variables; second, a model that controls for product market factors; and finally, a model that controls for socio-demographic factors. Following Anderson and Nevin, Haberman, Lenten and Rulli and Josa the paper further separates all models into linear and log-linear demand functions. Findings – The paper demonstrates that income, Islamic banking development, education, dependency ratio and Muslim population factors are positively related to Takaful demand. On the other hand, inflation, real interest rate, financial development and life expectancy appear to be the significant factors that adversely influence the total family Takaful consumption. Research limitations/implications – The major limitation of this paper is the small sample size. Therefore, future studies may expand the variables omitted in this study due to unavailability of data, which may be influential in explaining the family Takaful demand in Malaysia. Possible influential variables may include government social security expenditure, price of Takaful and level of competition within the Takaful and insurance industry. Research should also be conducted on the impact of the legal system and government policies on the demand for family Takaful in the country. Finally, the study focuses solely on the determinants of demand for family Takaful. Nevertheless, the supply-side of the equation should not be neglected and should be incorporated in future studies. Originality/value – It is obvious that there are very few studies that focus on the Malaysian market and indeed, none of them gives attention to the factors that influence demand for family Takaful. In this regard, this study contributes in filling the gaps in the scope and coverage of studies in similar area. While this study is expected to provide more understanding and awareness on the concept of Takaful and the factors that influence its demand, the authors hope that it would encourage more studies on various issues on the Takaful industry so as to help researchers to understand more aspects of this new emerging business.

An exploratory analysis of management accounting practices in the Arab Gulf Cooperative countries

literatinetwork@emeraldinsight.com (John Daniel Mclellan, Esam Moustafa) — Fri, 12 Apr 2013 00:00:00 +0100

Abstract

Purpose – The aim of this research project is to examine the adoption rate of management accounting tools by businesses in the Gulf Co-operative Council (GCC) countries and attempts to determine if significant variances in the use of management accounting tools by GCC businesses are contingent on a companies' ownership, legal structure, size or industry sector. The study covers a broad range of businesses, from many different business sectors in six different Arab countries. Design/methodology/approach – An online survey on the adoption rate of 41 Management Accounting Tools was used to collect data. The Institute of Management Accountants invited 453 CMA's in the Gulf region to participate in the Survey of Management Accounting Practices in the GCC area. Factor analysis was employed to test the effects of company characteristics on the choice of management accounting tools. Findings – The study finds that companies in the GCC rely on the more traditional management accounting practices such as budgeting rather than the more recently developed strategically focused tools such as activity based management and the use of the balanced scorecard. The research also shows that company characteristics play a significant role in the use of management accounting tools by businesses. Overall, international ownership and incorporation tend to increase the use of many management accounting practices. Research limitations/implications – Results should be generalized cautiously due to the small number of responding companies. The use of individual tools may not be completely explained by the chosen independent variables; other factors such as management's preference and/or the cost and benefit of the tool may affect choice. Originality/value – Management accounting practices of businesses in the GCC have never been studied before. This study updates the literature on the management accounting tools by businesses.

The need of accounting standards for Islamic financial institutions: evidence from AAOIFI

literatinetwork@emeraldinsight.com (Adel Mohammed Sarea, Mustafa Mohd Hanefah) — Fri, 12 Apr 2013 00:00:00 +0100

Abstract

Purpose – The purpose of this paper is to determine the need of Islamic Accounting Standards – a review of the literature – for Islamic financial institutions (IFIs). Design/methodology/approach – The basis of the paper was stakeholder theory to analyse the need of accounting standards and to design the conceptual framework as evidenced from Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). The evidence reviewed suggests the need for Islamic accounting standards to fill the gap in accounting practice among Islamic financial institutions. Findings – The AAOIFI accounting standards serve as a guideline that may reflect the unique characteristics of IFIs and become a useful tool to meet the various needs of IFIs. Currently, one of the major challenges facing IFIs lies in the preparation of the financial statements under different accounting standards and which may lead to problems of comparability, reliability and compliance level measurement. This has resulted in a heated debate among scholars which has hitherto translated to the evolving existing literature surrounding the interpretation of the level of compliance with the Islamic accounting standards. The paper concludes with various recommendations for future research, the most important of which is the need for future studies on how AAOIFI accounting standards can be made mandatory in all Muslim countries. Originality/value – This paper contributes towards a better understanding and acceptability of the need of Islamic Accounting Standards.

The effects of new AAOIFI standards on Sukuk in choosing the most authentic Islamic principles

Fri, 12 Apr 2013 00:00:00 +0100

Abstract

Purpose – This paper aims to analyse the new standards on Sukuk which was issued by the Accounting and Auditing Organization for Islamic Financial Institution (AAOIFI) as a result of the strong critics posed by Shaykh Taqi in the end of 2007 that 85 percent of Sukuk issuance were not in line with the teachings of Shariah. Design/methodology/approach – This study reviewed samples of Sukuk prior and after the new AAOIFI pronouncement by focusing on controversial areas such as ownership transfer, pricing and guarantee element. This paper used content analysis approaches to analyse the pronouncement and the samples. Findings – The findings showed that there were negligible changes on the principle term and condition (PTC) of the Sukuk after the pronouncement, thus it did not have much effect in changing the Shariah Advisors and industry players when deciding more authentic principles and decisions. Originality/value – Based on the findings, it is acceptable that the advisors tried their very best in making efforts to minimize controversial decisions as to suit current financial practices.

2012 Awards for Excellence

Fri, 12 Apr 2013 00:00:00 +0100