Spotlight on Corporate Fraud: How Is Takaful Insurance Stability Affected by Its Disclosure?

Wael Hemrit () and Ines Belgacem
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Wael Hemrit: College of Business, Imam Mohammad Ibn Saud Islamic University (IMSIU), Riyadh P.O. Box 5701, Saudi Arabia
Ines Belgacem: College of Business, Imam Mohammad Ibn Saud Islamic University (IMSIU), Riyadh P.O. Box 5701, Saudi Arabia

Risks, 2024, vol. 12, issue 9, 1-24

Abstract: This study examines the influence of fraud disclosure (FR_DISC) in annual reports on the financial stability of Takaful insurance (TKI) in Saudi Arabia over the period of 2014 to 2022. Moreover, the current study aims to explore the mediating impact of Shariah board size in shaping this relationship using agency theory and examines whether the different Islamic governance attributes could affect this stability differently. Using the dynamic generalized method of moments (GMM) approach to address the possibility of endogeneity, it was found that FR_DISC is significantly negatively related to the financial stability of a sample TKI. We also provide evidence that the larger the size of a Shariah board, the less FR_DISC affects TKI stability. Furthermore, significant negative influence of ownership concentration and the proportion of non-executives’ independent board members on the stability of insurance companies was also observed. Overall, our analysis reveals several significant challenges if accounting and whistleblowing are to contribute to financial stability.

Keywords: Takaful insurance; fraud disclosure; financial stability; whistleblowing; Saudi Arabia (search for similar items in EconPapers)
JEL-codes: C G0 G1 G2 G3 K2 M2 M4 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jrisks:v:12:y:2024:i:9:p:145-:d:1476820

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