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Chp_09Hypothesis Testing of IAQ

Chp_09Hypothesis Testing of IAQ



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Published by: Dr. Shahul Hameed bin Mohamed Ibrahim on Jan 08, 2009
Copyright:Attribution Non-commercial


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Chapter 9 Page 387
In this chapter, the hypotheses set out in chapter 7 will be tested and the findingsreported and interpreted. The object of this chapter is to present evidence of theperception of Malaysian Muslim Academics and Accountants on the nature of Islamicbusinesses, the objective and characteristics of Islamic accounting and whetherconventional accounting is inappropriate for Islamic organisations and users.Consensus of scholars (‘
) is considered as a method by which Islamic law canbe derived when interpretations of principles of the Qur’an to practical life are varied(Kamali, 1991). The survey research is thus seen as a means of evidencingconsensus among Muslim academics and Accountants (who constitute, at leastpartially, the relevant ‘
) on the objective and characteristics of Islamicaccounting. As this is an exploratory study of the subject, it is considered adequateby the researcher to conduct a univariate analysis on the data without attempting tostudy relationship among different variables.The general conclusion from the analysis is that respondents believe that Islamic andMuslim organisations should follow Shari’ah/ethical principles and promote socialwelfare rather than concentrate on profits. However, the respondents do not perceivethe need to forgo the profit maximisation objective as long as the Shari’ah constraintsare fulfilled. There also seems to be a favourable response to the need for Islamicaccounting among Muslim accounting academics and accountants in Malaysia. Mostof the participants agree with the accountability objective of Islamic accounting andsupport the integrative and holistic nature of Islamic accounting information. Althoughthe respondents are not convinced about the unsuitability of the conventionalaccounting concepts of historic cost, prudence and monetary measurement, for
Chapter 9 Page 388
Islamic organisations and Muslim users, they generally agree that conventionalaccounting is not suitable in terms of its objectives, the information it provides and itsbehavioural effects.In the next chapter, evidence from a survey of Muslim executives and employees ofboth Islamic and Non-Muslim companies in Malaysia, regarding the unIslamicbehavioural effects of conventional accounting are presented. Together with theevidence presented in this chapter, there is at least
prima facie 
evidence for thedevelopment of an Islamic accounting system, although further research is needed toelaborate on more practical ideas and obtaining evidence of wider consensus amongMuslim users and accountants in other Muslim countries.
The objectives and operations of Islamic and Muslim organisations should havesome unique characteristics, if there is to be a need for an alternate Islamicaccounting system for these organisations. These objectives and operations shouldbe different from non-Islamic organisations, as otherwise, it would be a case ofreinventing the wheel or adding cosmetics to conventional accounting. The firstresearch question therefore is:
Are the socio-economic principles under which Islamic business organisationsoperate different from those of non-Islamic business organisations?
The researcher has attempted to argue that arising from the different world-view ofIslam discussed in chapters 2, the objectives and operations of Islamic business andnon-business organisations are different. This was illustrated in detail in the case ofIslamic banks and to some extent Islamic business organisations, which wasdiscussed in chapter 5.Islamic organisations have to carry out their financing, investing and operatingactivities according to the Shari’ah. In addition, from the world-view of Islam, the
Chapter 9 Page 389
researcher believes that profit maximisation or wealth maximisation is not theultimate rationale for the existence of Islamic business organisations. Instead,earning a reasonable rate of return according to the risk undertaken should sufficeMuslim investors who should always keep the success of the hereafter in mind.Hence, the equitable treatment of other groups and the general social well-being ofthe community should be more important to the Muslim businessmen than profits.This is the theory and it thus remains to elicit empirical evidence to substantiatethese arguments. This could be done to some extent by undertaking analyses of thefinancial statements of Islamic organisations. However, given that conventionalfinancial statements do not disclose details on the Islamicity of operations, it wasconsidered more appropriate to obtain the perceptions of accountants, academicsand executives of various companies in this regard. Academics play an importantrole in moulding current and future business leaders while public accountants provideimportant services as auditors and consultants. Further, corporate accountants playkey roles in running the organisations in various capacities such as companyaccountant and finance manager. Thus, the perceptions of these groups ofrespondents are relevant to determine the actual and intended state of theseorganisations. Two hypotheses were developed and set up in a hypothesis statisticaltesting framework with a null hypothesis H
and alternative hypothesis H
, in attemptto answer these questions. The first hypothesis is as follows:
Malaysian Muslim accountants and accounting academics believe that Islamic Business organisations concentrate more on profits as compared to the attainment of social welfare.
: Malaysian Muslim accountants and accounting academics believe that Islamic Business organisations concentrate more on the attainment of social welfare than on profits.

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