Does Financial Performance Mediate the Effect of Good Corporate Governance on Indonesian Ṣukūk Rating?

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Dwi Sulistiani
Bambang Tjahjadi

Abstract

Ṣukūk is one of the products of Islamic financial institutions IFIS), so the rating of such instruments should be considered. This study aims to provide empirical evidence of the influence of Good Corporate Governance on Ṣukūk rating, with financial performance as a mediating variable. Multiple regression, ordinal logistic regression and Sobel test were used to test the Assumptions on 222 Ṣukūk, which were listed on the Indonesia Stock Exchange as of December 31st, 2020. The results show that the supervisory board's size, independence, experience, and the audit committee's size and experience directly affect the Ṣukūk rating. Financial performance has also been shown to have a direct influence on Ṣukūk rating, which in turn can mediate the effect of the three elements of the Good Corporate Governance supervisory function on Ṣukūk rating, namely: the size of supervisory boards, the independence and the number of Sharīʿah supervisory boards. It is therefore important for companies to pay due attention to the Good Corporate Governance, especially with regard to the supervisory function and financial performance to support Ṣukūk rating. This study confirms that the existence of a Sharīʿah supervisory board can support the achievement of financial performance and Ṣukūk rating in IFIs.

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How to Cite
Sulistiani, D., & Tjahjadi, B. . (2022). Does Financial Performance Mediate the Effect of Good Corporate Governance on Indonesian Ṣukūk Rating?. Journal of King Abdulaziz University: Islamic Economics, 35(2), 96–113. Retrieved from https://journals.kau.edu.sa/index.php/JKAUIE/article/view/326
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Author Biographies

Dwi Sulistiani, Lecturer, Faculty of Economics and Business, Universitas Airlangga, Indonesia

Dwi Sulistiani is a lecturer in Accounting at the Faculty of Education at the State Islamic University of Maulana Malik Ibrahim Malang who is currently taking doctoral studies in the doctoral program in accounting at the Airlangga University. Her research explores the factors affecting organizational performance. He is particularly interested in Shariah accounting, sustainability, shariah supervisory board, Islamic higher education, Islamic economic and Public Sector Accounting. His work has appeared several international journals. E-mail: dwi.sulistiani-2020@feb.unair.ac.id or dwisulistiani@pips.uin-malang.ac.id.

Bambang Tjahjadi, Professor, Faculty of Education, Universitas Islam Negeri Maulana Malik Ibrahim Malang, Indonesia

Prof. Dr. Bambang Tjahjadi is a Professor at the Faculty of Economics and Business, Universitas Airlangga for more than 30 years. His research explores the factors affecting organizational performance. He is particularly interested in diverse strategic management issues influencing firm value and performance, management accounting research, sustainability, green innovation, and MSMEs. His work has appeared several international journals. Email: bambang.tjahjadi@feb.unair.ac.id.