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(i) having a female branch (since our focus is on those IBs in the Arabian Gulf region); (ii) creating job opportunities; (iii) supporting organisations that benefit society and participating in government social activi- ties; (iv) sponsoring Islamic educational and social events.

In short, communication of the detailed aspects of the five traits described above would help annual report users gauge the ethical identity of IBs. How- ever, as mentioned by Fukukawa and Moon (2004), one common problem in communication manage- ment is deciding the extent and format of disclosure, because communication does not necessarily denote activity and its absence does not necessarily indicate non-activity. The communication decision gets more complicated when ethics is the basis for deciding the rights’ and responsibilities’ of users and providers of corporate information, respectively, due to the absence of a certain communis opinio (common opinion) on human ethical or moral reasoning, which thus increases conflicts of interest between different groups in society (Haniffa and Hudaib, 2002). In addition, as argued by Gray et al. (1996), rights’ and responsibilities’ based on ethics could be absolute’ (unvarying with time and place) or rela- tive’ (changing with time and place), depending on one’s interpretation. But for Muslims, the Shari’ah is considered as both stable’ (based on the Qur’an and Hadith, i.e. sayings, approvals and actions of the Prophet Muhammad) and dynamic’ (based on Ijma’, i.e. consensus of Muslim scholars, and Qiyas, i.e. represented in the analogical deductions from the other three sources for contemporary issues that are not directly mentioned in those sources but have similar characteristics to those that existed in the past) and it addresses the oeconomicus, ethicus and religiosus needs of their stakeholders. In other words, IBs are perceived as institutions enabling their stakeholders to fulfil their economic needs with assurance that they are within the dictates of their religious faith and business ethics. In short, Islam encourages economic endeavours and the maximi- sation of profit, but this must be within the bounds of the religion and business ethics.

Reviews by the Shari’ah Supervisory Board (SSB) All Islamic banks have a Shari’ah Supervisory Board (SSB) whose role is to ensure that any new formu- lations and modalities are in line with Shari’ah principles and within the ambit of Islamic norms. In other words, the SSB acts as an internal control mechanism and its primary objective is ... to give credibility to the operations of Islamic banks by authenticating their legitimacy from the Shari’ah point-of view’ (Mudawi, 1984, p. 4). Membership of SSBs is often drawn from the professional spe- cialist of Islamic jurisprudence (u’lama) (Gambling et al., 1993) and they perform all or part of the following duties: setting the Shari’ah rules for the conduct of banking business; examining all or part of the bank’s transactions to ascertain whether there have been breaches of the Shari’ah rules; and issuing a statement in the annual report of the bank as to whether or not the bank has conducted its business in compliance with the Shari’ah (Karim, 1990). Confidence in the Shari’ah scholars is the bedrock of Islamic banking and any doubts concerning their integrity and ability to handle complex financial systems and keep the operation Islam compliant may lead to a loss of confidence in the system. Thus, the SSB report should ideally communicate:

(i) names, pictures and remuneration of SSB members; (ii) number of meetings held; (iii) whether there are defects in the products of- fered and if there are, what are their recom-

Having identified the dimensions of the ideal ethical identity for IBs, the next stage is to assess whether disparities exist between the communicated and ideal ethical identities. The following section describes our research method.

102

Roszaini Haniffa and

Mohammad Hudaib

Public duties in Islam are seen as a part of the general meritorious and ethical tendency of the faith (Dien, 1992). The circumstantial needs of the community within which the IBs operate should first be catered to. Hence, IBs should ideally communicate the following to indicate their commitments to society:

mendations to rectify the defects and the actions taken by management;

  • (iv)

    basis of examination of the documents;

  • (v)

    attestation that profits are gained lawfully;

  • (vi)

    signatures of all members.

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