Disclosure Level’s Effect of Islamic Social Reporting on Company’s Profitability and Zakat

The purpose of this study was to examine the effect of the Islamic Social Reporting (ISR) disclosure level on profitability and on the number of Zakat paid by the Islamic banking companies in Indonesia. This study used documentary studies with associative research’s type. Samples used was purposive sampling method and was selected eight Islamic Banks in Indonesia. The observation period was 2011-2015 with a lag time t+1. Data were analyzed using Partial Least Square (PLS) Program. The data collection derived from secondary data, financial statements and annual reports published by Bank of Indonesia website and the website of each Islamic Banks. The results show that the disclosure level of ISR has a significant and positive effect on profitability represented by Return on Assets ratio (ROA) and Return on Equity ratio (ROE). Furthermore, the profitability of the Islamic Banks has a significant and positive effect on the amount of Zakat paid by the Islamic Banks in Indonesia. This research used only profitability as an independent variable that influenced company performance, in particular ISR disclosure, while several other factors are also predicted have effect on company profitability. Moreover, this research only used profitability variable which is also predicted has influencial on company Zakat, while several other factors also predicted have effect on company Zakat.