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What Influences Stock Market Reaction to Sukuk Issues? The Impact of Scholars and Sukuk Types

Christophe Godlewski (), Rima Turk-Ariss and Laurent Weill ()
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Rima Turk-Ariss: Lebanese American University

Authors registered in the RePEc Author Service: Rima Turk Ariss

Working Papers of LaRGE Research Center from Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg

Abstract: Sukuk, the shari’a-compliant alternative mode of financing to conventional bonds, have considerably expanded over the last decade. We analyze the stock market reaction to two key features of sukuk: type and characteristics of the shari’a scholar certifying the issue. We use the event study methodology to measure abnormal returns for a sample of 131 sukuk from eight countries over the period 2006-2013 and find that Ijara sukuk structures exert a positive influence on the stock price of the issuing firm. We observe a similar positive impact from shari’a scholar reputation and proximity to issuer. Overall our results support the hypotheses that the type of sukuk and the choice of scholars hired to certify these securities matter for the market valuation of the issuing company.

Keywords: financial instruments; Islamic finance. (search for similar items in EconPapers)
JEL-codes: G14 P51 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ara
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:lar:wpaper:2014-03

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