Halal Food Certification, Financial Performance, and Sustainability Reporting: Comparative Study of Food and Beverage Firms in Malaysia and Indonesia

Abstract

The demand for goods and services that adhere to halal standards rises along with the number of Muslim societies. The process of certifying goods or services under sharia, or Islamic law. The current study examines a corporation's performance in relation to Halal food certification. It also intended to examine the effects of halal food certification on publicly traded Malaysian and Indonesian food and beverage companies' sustainability reporting. The current study, which uses multivariate linear panel data regression to examine 245 firm years in Malaysia and Indonesia from 2016 to 2020, demonstrates that halal certification positively impacts the business's performance in Malaysia and Indonesia. Second, the study shows that reporting on sustainability is negatively impacted by halal certification. Third, compared to Indonesian firms, Malaysian firms are less concerned with sustainability reporting. Consequently, this study offers two contributions. First, this is the first study to examine how halal certification affects the caliber of sustainability reporting. Second, the outcome offers concrete evidence of how the halal certification affects sustainability reporting from the perspectives of Malaysia and Indonesia. The conclusion is that halal certification as a commitment by food and beverage businesses to offer goods and services in line with sharia principles has a beneficial effect on corporate performance. This suggests that switching to halal goods and services can improve a company's success. However, the anxiety with halal certification causes businesses to pay less attention to sustainability reporting. Companies put more emphasis on obtaining halal certification than fulfilling the sustainability reporting requirements for food and beverage businesses in Malaysia and Indonesia.