Islamic Social Reporting as Governance Innovation and Mining Stock Prices on the Jakarta Islamic Index

Abstract

Islamic Social Reporting (ISR) has emerged as an important governance mechanism for enhancing transparency, ethical accountability, and stakeholder trust in Islamic capital markets. Nevertheless, the extent to which ISR disclosure is recognized by investors and reflected in stock prices remains inconclusive. This study aims to examine the effect of ISR disclosure on the stock prices of mining companies listed on the Jakarta Islamic Index (JII), while also analyzing the influence of inflation, interest rates, and exchange rates. A quantitative associative research design was employed using panel data from ten mining companies listed on the JII during 2021–2024, generating 40 firm-year observations. ISR was measured using an Islamic disclosure index, while macroeconomic and stock price data were obtained from secondary sources. Panel regression analysis was conducted using EViews 12, with the appropriate model determined through Chow, Hausman, and Lagrange Multiplier tests. The findings demonstrate that inflation has a positive and significant effect on stock prices (t = 2.36; p = 0.0263). In contrast, interest rates (p = 0.6345), exchange rates (p = 0.7252), and ISR disclosure (t = 0.86; p = 0.3957) do not have significant individual effects. Although the average ISR disclosure reaches 75.47%, it does not function as a statistically significant pricing signal. However, the variables jointly explain 95.86% of stock price variation. These findings indicate a gap between governance innovation and pricing innovation, suggesting that ISR has primarily developed as a compliance and accountability mechanism rather than as an effective market valuation signal.