Journal of Business Ethics (2007) 76:97–116 DOI 10.1007/s10551-006-9272-5
Exploring the Ethical Identity of Islamic Banks via Communication in Annual Reports
Roszaini Haniffa Mohammad Hudaib
ABSTRACT. Islamic Banks (IBs) are considered as having ethical identity, since the foundation of their busi- ness philosophy is closely tied to religion. In this article, we explore whether any discrepancy exists between the communicated (based on information disclosed in the annual reports) and ideal (disclosure of information deemed vital based on the Islamic ethical business framework) ethical identities and we measure this by what we have termed the Ethical Identity Index (EII). Our longitudinal survey results over a 3-year period indicate the overall mean EII of only one IB out of seven surveyed to be above average. The remaining six IBs suffer from disparity between the communicated and ideal ethical identities. We further found the largest incongruence to be related to four dimensions: commitments to society; disclosure of corporate vision and mission; contribution to and management of zakah, charity and benevolent loans; and information regarding top management. The results have important implications for communication management if IBs are to enhance their image and rep- utation in society as well as to remain competitive.
KEY WORDS: corporate identity, content analysis, ethical disclosure, Islamic banking, reputation
AAOIFI The Accounting and Auditing Organisation
ABB ADIB ARB BIB DIB EII IB(s) KFH SIB SSB
for Islamic Financial Institutions Al-Baraka Bank Abu Dhabi Islamic Bank Al-Rajhi Bank Bahrain Islamic Bank Dubai Islamic Bank Ethical Identity Index Islamic bank(s) Kuwait Finance House Shamil Islamic Bank Shari’ah Supervisory Board
Roszaini Haniffa is a Senior Lecturer and Head of Accounting and Finance at the Bradford University School of Management. She holds a PhD from Exeter University and has published papers in Abacus, Journal of Accounting and Public Policy, Journal of Business Finance and Accounting and other journals. Her research interests focus on social responsi- bility reporting, corporate governance, international accounting and the Islamic perspective of accounting. Ros has reviewed papers and is a member on the editorial board of several journals. Mohammad Hudaib is a Lecturer in Accounting at the Bradford University School of Management and holds a PhD from Essex University. He has previously taught at Exeter University and prior to his teaching career, was an auditor in Saudi Arabia. He has published papers on auditing and corporate governance in Journal of Business Finance and Accounting. His current research interests include auditing, Islamic perspective of accounting, accounting theory and ethics.
Identity, according to the Oxford Dictionary, is (1) absolute sameness; oneness; equality of two expres- sions for all values of the literal quantities, equation expressing this; (2) condition or fact that person or thing is itself and not something else; individuality, personality’ (The Oxford Dictionary, 1984). In terms of corporate identity, the consistent visual sym- bols of the corporation fit the first linguistic defini- tion, while the distinct attributes of the corporation (Balmer, 1998; Bernstein, 1984) or the reality and uniqueness of the organization’ (Gray and Balmer, 2001, p. 1) fit the second definition. Hence, cor- porate identity can be the same and yet different’ (Bernstein, 2003).
A review of the literature on corporate identity indicates a plethora of definitions for the term,