Review of Ghaffars Article (2014) and Research Opportunities on Islamic Governance
Author(s)
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Abstract
This paper criticizes articles written by Ghaffar published in the Interdisciplinary Journal of Contemporary Research in Business in 2014. Ghaffar's (2014) study examines the impact of governance practices on the profitability of Islamic banks. Corporate governance variables in the study were measured by board size and board independence, while bank profitability was measured using the ratio of return on assets and return on equity. The results of Ghaffar (2014) found that all variables of corporate governance (board size and board independence) have a significant influence on bank profitability. Criticism of the article relates to the use of governance that is generally applicable in companies. In the article, governance variables that have not been specifically used in sharia entities, especially Islamic banking, have not been used, for example in the presence of the Sharia Supervisory Board and disclosures regarding compliance with sharia principles. Future research can be focused on 3 aspects, namely (1) testing the influence of governance on company value and credit risk; (2) examine the impact of governance on social performance and dimensions of corporate spirituality; and (3) testing the impact of governance on earnings management.
Keywords
board size, board independence, return on assets, return on equity, Islamic bank
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