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All Journal MUQADDIMAH: Jurnal Ekonomi, Manajemen, Akuntansi dan Bisnis
Nurfitriani Nurfitriani
Bandung Islamic University
Economics, Econometrics & Finance

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The Effect of Islamic Social Reporting (ISR) Disclosure as a Legitimacy Strategy on Firm Value Nurfitriani Nurfitriani; Muhardi Muhardi; Tasya Aspiranti
MUQADDIMAH: Jurnal Ekonomi, Manajemen, Akuntansi dan Bisnis Article in Press
Publisher : LP3M INSTITUT KH YAZID KARIMULLAH

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.59246/kg27ve47

Abstract

Corporate accountability demands based on Islamic values drive Sharia-compliant companies to utilize Islamic Social Reporting (ISR) as a legitimacy strategy instrument to enhance firm value. This quantitative research examines the influence of ISR disclosure on firm value measured via Tobin’s Q across 85 Sharia-compliant firms listed on the Indonesia Stock Exchange during the 2019–2023 period (425 observations). Secondary data gathered from annual and sustainability reports were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) via SmartPLS 4.0 software. Structural model evaluations demonstrate that ISR disclosure exerts a statistically significant positive effect on firm value, featuring a path coefficient of 0.563, a t-statistic of 7.284, and a p-value of 0.000 (< 0.05). The ISR index accounts for 31.7% of the variance in firm value () with satisfactory predictive relevance () and a medium effect size (). These empirical findings reinforce Legitimacy Theory and Signaling Theory by confirming that ethical-spiritual transparency effectively reduces information asymmetry and builds corporate reputation in capital markets. Practically, Sharia corporate managers are urged to integrate ISR dimensions into core business strategies to solidify investor trust and drive optimal market valuations.
Co-Authors Muhardi Muhardi Tasya Aspiranti