Corporate Governance: An Islamic Institution Perspective

This takes the paper into a discussion of some of the most crucial aspects of corporate governance, including its objectives, mechanisms and tools. One of the most important objectives is resolution of the principal/agent conflict of interest with a view to promote the interests of all stakeholders as well as the soundness and stability of the financial system. The most important mechanisms for this purpose are the Board of Directors, Senior Management, shareholders and depositors. The paper discusses the measures that need to be taken to make the Board and the Management more effective and accountable in the performance of their roles and to enable the shareholders and depositors to play a greater role in protecting their own interests. The paper then addresses some of the standard tools that are available for making the Board and the Management more effective and accountable.

Source: International Journal of Islamic Banking and Finance Research

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