Abstract
Purpose: The study investigates the Shari'ah governance quality effectiveness, at the bank and national levels, on the value relevance of Islamic banks' Earning per Share and Book Value per Share. Design/methodology/approach: Quantitative analyses are conducted using a panel of 40 listed Islamic banks from 12 countries during 2012-2019. Data were retrieved from the Refinitiv-Eikon database and banks' annual reports. Findings: The findings suggest that Shari'ah supervisory boards' attributes negatively influence the value relevance of accounting information while the internal procedures positively impact it. The results also provide evidence of a complementary effect between Shari'ah governance mechanisms at the bank and national levels on the value relevance of accounting information. Originality: Existing studies tend to ignore the effectiveness of Shari'ah governance quality at the bank level on value relevance. There is a similar lack of empirical research on the effectiveness of the centralized Shari'ah governance scheme on accounting issues. Research implications: Islamic banks' boards and managers need to be more aware of the role of Shari'ah governance and its impact on value relevance. The observed complementarity between Shari'ah governance systems at the bank and national levels may incite regulators to include comprehensive Shari'ah governance regulations in their best practices. Strengthening collaboration between regulators and the AAOIFI is also required to create an enabling environment for investors to rely on the AAOIFI accounting standards in their investment decision-making process.