Corporate Governance: Surveying the Literature

Chapter Three discussed the theoretical framework for understanding and analyzing the relationship between corporate governance and voluntary disclosure. Using an integrated theoretical framework derived from the combination of agency, stakeholder, legitimacy, and signaling theories, this study investigates the impact of corporate governance mechanisms such as the board of directors and the audit committee on the extent of voluntary disclosure by Islamic and conventional banks. This chapter surveys the extant literature on the impact of corporate governance on the extent of disclosure by Islamic and conventional banks and examines prior studies relevant to the research questions. More specifically, the chapter focuses on the board characteristics and internal control elements that are the most studied aspects of corporate governance (Wan-Hussin, 2009). The chapter examines in detail their impact on the extent of disclosure. The chapter also discusses prior studies specific to Islamic banks and the role of Shariah governance in the extent of disclosure. The chapter then presents the hypotheses developed for this book in line with the relevant literature and the integrated theoretical framework discussed in Chapter Three. The chapter concludes with remarks on key points from the literature review.