Voluntary disclosure by Shariah approved companies: an exploratory study

Purpose The purpose of this paper is to investigate the extent of voluntary disclosure (EVD) (i.e. overall, conventional, and Islamic disclosure) in the annual reports of Shariah Approved Companies ( Sh AC) listed on Bursa Malaysia. Design/methodology/approach A disclosure index was developed, which consists of 59 items (including items related to the Shariah , i.e. Islamic items), to measure the EVD in the annual reports of Sh AC. Secondary data from annual reports were analyzed using descriptive statistics and t ‐test. Findings Sh AC disclosed on average 19, 21 and 17 percent of overall, conventional, and Islamic items, respectively. The EVD of conventional items is comparable to prior studies, and higher than Islamic items. Research limitations/implications The paper only used one‐year annual reports for the year 2003, but it provides a starting point for future research on the issue of voluntary disclosure by Sh AC. Practical implications The findings provide evidence that Sh AC still lack voluntary disclosure, especially, Islamic disclosure items. Such findings could be useful to regulation authorities in Malaysia for the improvement of overall disclosure practices by Sh AC. Originality/value The paper is the first empirical study to investigate the EVD, both Islamic and conventional, in the annual reports of Sh AC.