Abstract—This study examines the effect of Islamic Corporate Social Responsibility disclosure and on corporate reputation as well as performance. These relationships are examined based on content analysis of of annual reports of 17 Islamic banks in Malaysia for 2008, 2009 and 2010. Results of this study provide evidence that CSR activities communicated in corporate annual reports are significantly positively related with corporate reputation as well as firm performance. These results indicate that CSR activities and disclosure from Islamic perspectives are equally important business strategies in creating continuous superior performance for organisations. In addition, it also highlights that organisations need to develop a stakeholder orientation particularly in an environment of increasing pressure from jurisdictions dominated by Islamic stakeholders on organisations engaging in Islamic products to increase their social responsibilities from the Islamic perspectives. Keywords—Islamic Corporate Social Responsibility, Corporate Reputation, Firm Performance, Islamic Banks I. INTRODUCTION ORPORATE social responsibility (CSR) initiatives have been subjected to increasing demand by various stakeholders. This in turn has increases the pressure for organisations to increase their CSR activities and communicate it to the stakeholders. In response to these demands, it is imperative that managers disclose CSR information that meets the needs of multiple stakeholders. Failure to do so can result in withdrawals of support and consequent adverse effects on corporate reputation as socially responsible organisations and ultimately reduces economic benefits to the organisations [26]. Organisations operating within the principles of Islamic moral law (Sha’riah), such as Islamic banks, are exposed to additional demand with regards to their CSR initiatives. Reference [13] argues that the majority Muslim dominated society in Malaysia expects higher level of disclosure practices in companies’ annual reports. This suggests that the Muslim dominated stakeholders in Malaysia expect more comprehensive disclosure of CSR activities of Islamic banks. In meeting their needs to make economic decisions based on Islamic ethical values, these organizations need to provide information on CSR activities that reflect the Islamic perspectives. While companies in developed countries have acknowledge the importance of incorporating CSR practices into their business strategies, many companies in developing countries often lag behind their developed countries’ counterparts [14]. Roshayani Arshad is with the National Institute of Standards and Technology, Boulder, CO 80305 USA (phone: 303-555-5555; fax: 303-555- 5555; e-mail: author@ boulder.nist.gov). Suaini Othman, Jr., was with Rice University, Houston, TX 77005 USA. He is now with the Department of Physics, Colorado State University, Fort Collins, CO 80523 USA (e-mail: author@lamar. colostate.edu). Rohana Othman is with the Electrical Engineering Department, University of Colorado, Boulder, CO 80309 USA, on leave from the National Research Institute for Metals, Tsukuba, Japan (e-mail: author@nrim.go.jp). Several past studies have began to examine the link between CSR disclosures and economic benefits [26], there are very limited research on the relationships between CSR disclosures from an Islamic perspectives and economic benefits [11]. Hence, this study aims to examine the relationships between Islamic corporate social responsibility (ICSR) and corporate reputation as well as firm performance. Findings in this study will add to the limited insight on these relationships. The influence of ICSR on corporate reputation is examined from the resource-based perspective (RBP). This theory posits that CSR disclosures are a medium for organizations to build their corporate reputation by potraying that they are socially responsible and sensitive to the stakeholders’ concern [1]-[30]. The second relationship in this study is examined based on the stakeholder theory perspective. This theory posits that when corporations meet the expectations of various stakeholders, they are more capable in creating superior firm performance [2]. This paper will proceed with the review of past literature from which hypotheses will be developed. The paper will then proceed to the empirical stage of variable measurement, sampling, data analysis and discussion of results. The final part of this paper presents conclusion, limitations and suggestions for future research. II. LITERATURE REVIEW AND GENERATION OF HYPOTHESES A. ICSR Disclosure and Corporate Reputation Increasing awareness regarding the role of business in society has led to greater demand for managers to implement CSR that can meet the demand of various stakeholders. As organisation operates within a network of different stakeholders who can influence the organisation directly or indirectly, the ability of managers to address societal expectations is an important tool in building good relationships between the organizations and the various stakeholders. From a resource-based perspective (RBP), disclosure of CSR initiatives is a medium for organizations to potray that they are socially responsible and sensitive to the stakeholders’ concern [1]-[30]. Failure to meet the demands of various stakeholders can lead to withdrawals of support and consequent adverse effects on the organisation’s image and economic sustainability. This implies that perceptions of multiple stakeholders contribute to the creation of corporate reputation [27], which in turn will result in economic benefits [26]. Reference [27] argued that corporate reputation will be enhanced when companies engage in CSR activities and disclose them in their annual reports. These companies are perceived to have good corporate values and intangible assets that could be positively translated in many ways such as attracting customers, generating investment interest, attracting the best talent, motivating workers, enhancing job satisfaction, generating more positive media coverage and receiving Roshayani Arshad, Suaini Othman, Rohana Othman Islamic Corporate Social Responsibility, Corporate Reputation and Performance C World Academy of Science, Engineering and Technology International Journal of Economics and Management Engineering Vol:6, No:4, 2012 643 International Scholarly and Scientific Research & Innovation 6(4) 2012 scholar.waset.org/1307-6892/10239 International Science Index, Economics and Management Engineering Vol:6, No:4, 2012 waset.org/Publication/10239