BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 21/2014:
Do the type of sukuk and choice of shari’a scholar matter?
Christophe J. Godlewski ()
, Rima Turk-Ariss ()
and Laurent Weill ()
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 this instrument:
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; shari’a scholars; (follow links to similar papers)
JEL-Codes: G14; P51; (follow links to similar papers)
30 pages, December 3, 2014
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