Firm Opacity and Islamic Securities Issuance

33 Pages Posted: 12 Jun 2020

See all articles by Sara Al Balooshi

Sara Al Balooshi

University of Bahrain ; University of St Andrews

Maria Chiara Iannino

University of St Andrews

Pejman Abedifar

University of St Andrews - School of Management; Khatam University - Tehran Institute for Advanced Studies

Date Written: April 18, 2020

Abstract

We study the relationship between opacity and external funding decisions when different types of sukuk and conventional financial instruments are available. For this purpose, we construct an opacity index for 107 Malaysian firms issuing sukuk and conventional financial instruments during 2005-2017. We apply a mixed-level multinomial logistic model for our analysis. We find that as opacity levels increase, the probability of firms issuing zero-coupon sukuk is the greatest followed by conventional bonds and profit-loss sharing sukuk, and equity. Our results suggest that issuing zero-coupon sukuk requires more supervision, which has important implications for policy-makers and investors.

Keywords: Corporate Capital Structure, Opacity, Islamic Finance, Sukuk, Emerging Markets, Multilevel Multinomial Logistic Model

JEL Classification: G3, G39, G32, D22, Z12

Suggested Citation

Al Balooshi, Sara and Iannino, Maria Chiara and Abedifar, Pejman, Firm Opacity and Islamic Securities Issuance (April 18, 2020). Available at SSRN: https://ssrn.com/abstract=3604514 or http://dx.doi.org/10.2139/ssrn.3604514

Sara Al Balooshi (Contact Author)

University of Bahrain ( email )

P.O Box 32038
Sukhair Campus, 32038
Bahrain

University of St Andrews ( email )

Castle Cliff
St Andrews
St Andrews, KY16 9AR
United Kingdom

Maria Chiara Iannino

University of St Andrews ( email )

School of Economics and Finance
Castlecliffe
St Andrews, KY16 9AL
United Kingdom

Pejman Abedifar

University of St Andrews - School of Management ( email )

The Gateway, North Haugh
St Andrews, Fife KY16 9RJ
United Kingdom

Khatam University - Tehran Institute for Advanced Studies ( email )

Tehran
Iran

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