Literature Review: The Influence of Financial Performance and Islamic Social Reporting Disclosure on Market Reaction
DOI:
https://doi.org/10.55927/ijabm.v4i1.27Keywords:
Financial Performance, Islamic Social Reporting, Market Reaction, Shariah Compliance, Earnings Response CoefficientAbstract
This literature review examines the role of transparency, accountability, responsibility, independence, and fairness in influencing employee performance within the context of technological advancements. Through a systematic analysis of eight recent scholarly articles (2021-2025) published in indexed journals, the study investigates how factors including firm size, profitability, leverage, and environmental performance affect investor responses as measured by earnings response coefficients (ERC) and abnormal returns. The methodological approach involves thematic analysis of these studies, categorizing findings to identify patterns in investor behavior across different market contexts. Results indicate that while financial performance metrics consistently influence market reactions, with firm size and profitability showing positive effects, the impact of ISR and sustainability disclosures remains inconsistent. The review reveals that Shariah-compliant firms, despite being perceived as more trustworthy, often elicit weaker market reactions to earnings announcements compared to conventional firms, suggesting different investor priorities based on ethical considerations. This comprehensive analysis provides valuable insights for researchers, financial practitioners, and policymakers seeking to understand the complex interplay between financial performance, ethical reporting, and market behavior in Islamic financial contexts
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