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

26 Pages Posted: 19 Feb 2014

See all articles by Christophe J. Godlewski

Christophe J. Godlewski

University of Strasbourg - Faculty of Law and Business; EM Strasbourg Business School; LaRGE Research Center

Rima Turk-Ariss

International Monetary Fund; Economic Research Forum

Laurent Weill

University of Strasbourg - LaRGE Research Center (Laboratoire de Recherche en Gestion et Economie)

Date Written: February 18, 2014

Abstract

There is a large expansion of sukuk, the shari’a-compliant alternative mode of financing compared to conventional bonds, in the recent years. We analyze if the stock market reaction to sukuk issues is influenced by two key features of these instruments: the sukuk type, and the characteristics of scholar advisors. To do so, we use the event study methodology to measure abnormal returns on a sample of 131 sukuk from eight countries over the period 2006-2013. We find that Ijara sukuk has a positive influence on the stock market reaction. We observe that reputation and proximity of scholars exert a positive impact on the stock market reaction following sukuk issue. Overall our results support the view that the choice of sukuk type and of scholars hired to certify sukuk matters for market valuation of the issuing company.

Keywords: financial instruments, Islamic finance

JEL Classification: G14, P51

Suggested Citation

Godlewski, Christophe J. and Turk-Ariss, Rima and Weill, Laurent, What Influences Stock Market Reaction to Sukuk Issues? The Impact of Scholars and Sukuk Types (February 18, 2014). Available at SSRN: https://ssrn.com/abstract=2397707 or http://dx.doi.org/10.2139/ssrn.2397707

Christophe J. Godlewski

University of Strasbourg - Faculty of Law and Business ( email )

1 place d'Athènes
Strasbourg, 67000
France

HOME PAGE: http://droit.unistra.fr/

EM Strasbourg Business School ( email )

61 Avenue de la Forêt Noire
Strasbourg, 67000
France

HOME PAGE: http://www.em-strasbourg.eu/

LaRGE Research Center ( email )

1 place d'Athènes
Strasbourg, 67000
France

HOME PAGE: http://droit.unistra.fr/

Rima Turk-Ariss

International Monetary Fund ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Economic Research Forum ( email )

21 Al-Sad Al-Aaly St.
(P.O. Box: 12311)
Dokki, Cairo
Egypt

Laurent Weill (Contact Author)

University of Strasbourg - LaRGE Research Center (Laboratoire de Recherche en Gestion et Economie) ( email )

61 Avenue de la Forêt Noire
F-67085 Strasbourg Cedex
France

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