FIRM SIZE MODERATING PROFITABILITY’S IMPACT ON ISLAMIC SOCIAL REPORTING (ISR)

Abstract

This study aims to determine the effect of a profitability on islamic social reporting with firm size as a moderating variable in Islamic banking: an empirical study of Indonesia. The growth of Islamic banks in Indonesia has led to the emergence of an ethics of disclosing social responsibility. As an Islamic institution, it is incumbent upon Shariah banks to pay attention to the environment as a form of care and responsibility towards society. To measure the extent to which Islamic banks adhere to the principles of Islam in disclosing Islamic Social Responsibility (ISR), this research will assess it based on the Islamic Social Reporting Index (ISR Index) model. The ISR Index consists of several items that serve as benchmarks for evaluating social performance in Islamic banking, comprising a compilation of standard items set by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). This study uses a quantitative research method. As for the sampling technique, we used purposive sampling. The type of data is secondary data. The samples used in this study were twelve banks registered in the Financial Services Authority from 2016 to 2020. Data analysis in this study used a path analysis with the application of the IBM SPSS. The result of this study indicates profitability has effect on islamic social reporting and firm size. While the results of research that has been done also shows a effect between profitability on islamic social reporting with moderation variable is firm size. In Islamic social reporting, high profitability can drive corporate managers to engage in broader and more transparent disclosures. As a company grows larger, managers may face pressure to disclose Islamic social reporting due to demands from external stakeholders. In this regard, the size of the