NEW EVIDENCE ON THE DIRECT AND INDIRECT INFLUENCE OF THE MAQASHID SHARIA INDEX ON THE ISLAMIC SOCIAL REPORTING INDEX.

Abstract

Empirical research on the maqashid sharia index is still limited in number. The novelty offered in this study lies in the research model. The model developed in this study is maqashid sharia-based Islamic social reporting. This study aims to obtain empirical evidence regarding the influence of the maqashid sharia index on the index of Islamic social reporting and the level of tax aggressiveness. In addition, this study also aims to obtain empirical evidence regarding the indirect influence of the maqashid sharia index on Islamic social reporting through the level of tax aggressiveness. The sample of this study is eleven Islamic banks in Indonesia during the period of 7 years (2010-2016). Data were analyzed using the Partial Least Square (PLS) approach. The results of this study indicate that the higher the maqashid sharia index the wider Islamic social reporting conducted by Islamic banks. Furthermore, the results of the study also found a negative influence on the maqashid sharia index on the level of tax aggressiveness. On the contrary, the results of the study failed to prove the indirect influence of the maqashid sharia index on the index of Islamic social reporting through the level of tax aggressiveness. The results of the research have an important contribution in expanding the theory of legitimacy, the concept and role of the maqashid sharia index. Aside from being a performance measurement tool, based on the results of this study shows that the maqashid sharia index can play a determinant role in the extent of Islamic social reporting and the level of tax aggressiveness in sharia commercial banks in Indonesia.