The Relationship between Islamic Corporate Governance, Human Governance, Usage of Information Technology and Sustainability Reporting: Comparison of Shariah Compliant Companies in Malaysia and Indonesia

This study aims to evaluate the relationship between Islamic corporate governance (ICG), human governance (HG), and information technology (IT) usage on sustainability reporting (SR) by investigating Shariah compliant companies in Malaysia and Indonesia. Data was collected from 68 manufacturing Shariah compliant companies’ annual reports for Malaysia, and 70 manufacturing Shariah compliant companies’ annual reports for Indonesia, for the year ended 2019. Descriptive and multiple regression analysis was used to analyse the data. The study found that HG Index and IT Usage Index were positive and significantly related to sustainability reporting for Shariah companies in both countries. However, ICG was not found to be significantly related to sustainability reporting for Shariah companies in Malaysia and Indonesia. This could be because the study focuses only on manufacturing companies, and in Malaysia and Indonesia, only about 24% of the companies and 13% of the companies respectively, have an ICG structure in place. The study suggests that to increase SR of Shariah compliant companies, there should be a good HG structure in place, and they should increase their level of IT usage in their business operations. Resource-Based theory can explain the relationship of IT Usage and HG to SR.