Integrated reporting quality, cost of debt and market value in Islamic banks

Purpose The purpose of this study is to assess the impact of the integrated reporting quality (IRQ) on the cost of debt (COD) and the market value of Islamic banks (IBs) operating in the MENA region. Design/methodology/approach Panel regression analysis was used to conduct an empirical study on the IBs operating in MENA zone over the 2012–2022 period. The dependent variables are the COD and the market value. The independent variable is the IRQ. The generalized method of moments procedure is used to check the robustness of main results. Findings Their empirical results show that, during the study period, corporate governance vision and strategy (CGVS) scores were significantly and negatively related to the COD. Thus, the higher-quality integrated reporting (IR) is associated with lower COD. Furthermore, the CGVS scores are negatively related to the bank market value. Thus, the higher-quality IR has become a cause of undervaluation. Dynamic regression analysis provides evidence on the dependence of COD and IRQ on their lagged variables. Originality/value By specifically examining the IBs, this study sheds light on the opportunities and challenges within this sector in terms of IRQ. Bank managers can use the outcomes of their study in implementing IR strategies and practices to reduce the COD and to enhance the bank performance.