CSR Disclosure of Shari’ah Compliant Companies in Indonesia: The Extent and Quality Examination

Abstract

In Indonesia, the number of Shari’ah Compliant Companies (ShCCs) has risen since the release of a fatwa that encourages the growth of the Islamic Capital Market (ICM) in the country. ShCCs are expected to be transparent in disclosing information in their annual reports. Besides non-financial information, the ShCCs also need to provide more information on compliance with Islamic teaching in their reports. This action is to fulfill their responsibility and accountability to society. This study aims to assess the extent and the quality of the Corporate Social Responsibility (CSR) disclosure in the annual reports of ShCCs of Indonesia. The data were collected from the 2014 annual report of 100 ShCCs in Indonesia. To measure the extent and quality of CSR disclosure, a checklist comprising 33 items was constructed. This study used descriptive statistics and reliability tests as the primary statistical tests. The results showed that the extent and quality of CSR disclosure among ShCCs in Indonesia are low. It suggests that ShCCs maintain the narrative disclosure stage rather than promote verifiable CSR information. Hence, companies must intensify the quality of CSR disclosure by providing CSR information in both quantitative and qualitative forms.