Proceedings of the 2nd International Conference on Business, Accounting, Banking, and Economics (ICBABE 2025)

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Shariah Compliance Companies (SCC) Investment Efficiency and Non-SCC: Evidence from Indonesia

Authors
Diana Hasyim1, *, Edison Parulian2, Nurul Wardani1
1Universitas Negeri Medan, North Sumatra, Indonesia
2Universitas IBBI Medan, North Sumatra, Indonesia
*Corresponding author. Email: dheeanahasheem@yahoo.com
Corresponding Author
Diana Hasyim
Available Online 27 October 2025.
DOI
10.2991/978-94-6463-862-2_6How to use a DOI?
Keywords
Shariah Compliance Companies (SCC); Investment Efficiency; Company size
Abstract

Corporate investment in the practice deviates from the optimal level due to financing constraints and agency issues. Understanding the primary reasons that cause investment inefficiency will help formulate policies that address the problem. Most prior research emphasizes that any governance mechanism that reduces agency risk and disciplines management enhances investment efficiency, but still lacks attention to Sharia law as another mechanism to mitigate investment efficiency issues. Therefore, we propose examining some attributes of Sharia principles to compare the investment efficiency of Shariah Compliance Companies (SCC) and non-SCC in Indonesia. The results indicate that both SCC and non-SCC invest inefficiently. Our study contributes to the emerging literature on the differences between SCC and non-SCC by demonstrating that the investment efficiency of SCC differs from that of non-SCC. SCC tend to invest at an above-optimal level (overinvestment), and conversely, non-SCC tend to invest at a below-optimal level (underinvestment).

Copyright
© 2025 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title
Proceedings of the 2nd International Conference on Business, Accounting, Banking, and Economics (ICBABE 2025)
Series
Advances in Economics, Business and Management Research
Publication Date
27 October 2025
ISBN
978-94-6463-862-2
ISSN
2352-5428
DOI
10.2991/978-94-6463-862-2_6How to use a DOI?
Copyright
© 2025 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Cite this article

risenwbib
TY  - CONF
AU  - Diana Hasyim
AU  - Edison Parulian
AU  - Nurul Wardani
PY  - 2025
DA  - 2025/10/27
TI  - Shariah Compliance Companies (SCC) Investment Efficiency and Non-SCC: Evidence from Indonesia
BT  - Proceedings of the 2nd International Conference on Business, Accounting, Banking, and Economics (ICBABE 2025)
PB  - Atlantis Press
SP  - 44
EP  - 60
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-862-2_6
DO  - 10.2991/978-94-6463-862-2_6
ID  - Hasyim2025
ER  -