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Do the Type of Sukuk and Choice of Shari'a Scholar Matter?
Author:
Christophe Godlewski https://isni.org/isni/0000000404811396 International Monetary Fund

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,
Ms. Rima A Turk
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https://orcid.org/0000-0001-5321-6524
, and
Laurent Weill https://isni.org/isni/0000000404811396 International Monetary Fund

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Series:
IMF Working Papers
Volume/Issue:
Volume 2014: Issue 147
Language:
English
Publication Date:
11 Aug 2014
DOI:
https://doi.org/10.5089/9781498398794.001
ISBN:
9781498398794
ISSN:
1018-5941
Pages:
25
Keywords:
WP; information asymmetry; market valuation; scholar-issuer relationship; event study; issuer country; issuing company; market index; Financial Istruments; Islamic Finance; Shari’a Scholars; certificate value; scholar characteristics matter; Stock markets; Global
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Sukuk, the shari’a-compliant alternative mode of financing to conventional bonds, have expanded considerably over the last decade. We analyze the stock market reaction to two key features of this financial 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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund