CEO hubris and Islamic banks’ performance: Investigating the roles of Sharia board vigilance and CEO power

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The purpose of the study is to thoroughly outline how the hubris behavior of chief executive officers (CEO) is detrimental to Islamic banks’ (IBs) performance. Specifically, this study attempts to examine the role of the Sharia supervisory board (SSB), board vigilance, and CEO power in the relationship between CEO hubris behavior and decreased IBs’ performance. This study observes IBs’ performance during the period from 2014 to 2020 and develops eight models to test their determinants. Empirical testing of all models shows that CEO hubris has a detrimental impact on IBs’ performance. The moderating impact test shows the following results: firstly, the presence of SSB, which is represented by the reputation of its members, reduces the detrimental impact of hubris behavior by CEOs on IBs’ performance, while that impact, which is represented by member expertise, does not have a moderating effect. Second, the size and independence of the BOC both weaken the negative relationship between CEO hubris and IBs’ performance. Third, CEO power as represented by tenure and ownership has no moderating effect.

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    • Figure 1. Conceptual framework: Interaction between moderating and independent variables on IBs’ performance
    • Table 1. Number of IBs and total observations
    • Table 2. Variable definition and their measurement
    • Table 3. Descriptive statistics of variables
    • Table 4. Pearson correlation matrix for all variables
    • Table 5. GLS regression with the random impacts analysis for SCBs and SUBs performance
    • Table 6. GLS regression with the analysis of the random impact for IBs’ performance
    • Conceptualization
      Zulfikar Zulfikar
    • Formal Analysis
      Zulfikar Zulfikar
    • Funding acquisition
      Zulfikar Zulfikar
    • Methodology
      Zulfikar Zulfikar
    • Validation
      Zulfikar Zulfikar, Rosida Nur Syamsiyati
    • Writing – original draft
      Zulfikar Zulfikar
    • Writing – review & editing
      Zulfikar Zulfikar
    • Data curation
      Nursiam Nursiam
    • Investigation
      Nursiam Nursiam, Mujiyati Mujiyati
    • Resources
      Nursiam Nursiam, Mujiyati Mujiyati, Rosida Nur Syamsiyati
    • Visualization
      Nursiam Nursiam, Mujiyati Mujiyati, Rosida Nur Syamsiyati
    • Project administration
      Mujiyati Mujiyati
    • Supervision
      Rosida Nur Syamsiyati