Business Ethics: A European Review, EarlyView.

We examine the relationships among religious governance, especially Islamic governance quality (IGQ), national governance quality (NGQ), and risk management and disclosure practices (RDPs), and consequently ascertain whether NGQ has a moderating influence on the IGQ–RDPs nexus. Using one of the largest data sets relating to Islamic banks from 10 Middle East and North Africa (MENA) countries from 2006 to 2013, our findings are threefold. First, we find that RDPs are higher in banks with higher IGQ. Second, we find that RDPs (...) are higher in banks from countries with higher NGQ. Finally, we find that NGQ has a moderating effect on the IGQ–RDPs nexus. Our findings are robust to alternative RDP measures and estimation techniques. These results imply that the quality of disclosure depends on the nature of the macro-social-level factors, such as religion that have remained largely unexplored in business and society research, and, therefore, have important implications for policy makers. (shrink)

Although a tainted outside director’s social status may serve as a buffer against devaluation owing to an affiliate firm’s corporate financial misconduct, the extent of this buffer effect is unclear. We propose a threshold approach by introducing the expectancy violation perspective, which generates a theoretical tension from the network-embeddedness perspective, to clarify the following question: From which perspective does the buffer effect of social status become more salient? Specifically, we propose an inverted U–shaped relationship between the directors’ social status and (...) the departure of tainted outside directors from host firms. We theorize that when directors’ social status exceeds a certain threshold, the network-embeddedness perspective is more dominant than the expectancy violation perspective. Moreover, a host firm’s external stakeholder attention and board social status moderate the inverted-U effect such that its turning point shifts to the right because such contingencies increase the threshold for the buffer. Using a sample of tainted outside directors penalized for associated firms’ financial misconduct, we find evidence that supports our predictions. Our study helps clarify the boundary between the competing theoretical perspectives of expectancy violation and network embeddedness to explain the phenomenon of tainted director departure. (shrink)