The Effect of Sokuk Issuance on Risk-adjusted Return and Stock Trading Value

Document Type : Research Paper

Authors

1 Assistant Prof., Department of Financial Management, Islamic Science and Management, Imam Sadeq University, Tehran, Iran

2 Associate Prof., Department of Financial Management, Faculty of Management & Accounting, Shahid Beheshti University, Tehran, Iran

3 Ph.D. Candidate, Department of Financial Management, Faculty of Management and Accounting, Shahid Beheshti University, Tehran, Iran

Abstract

Objective: The company’s decisions about its capital structure and financial are the influential factors that can shape or change investors’ ideas about a company trades and stock price. In this research, the effect of Islamic financial instrument (Sukuk) on risk adjusted return and stock trading value is investigated.
Methods: To examine the relationship between the variables, The Event Study method was implied for 5 days (one day prior to the distribution to three days afterwards). The sample is chosen from Sukuk issuers listed in Tehran Stock Exchange within the period of 2010-2015. Based on the data gathered from Tehran Stock Exchange database, the sample includes 20 issuing events.
Results: The empirical tests and robustness test (different event windows implied) results show that the research hypotheses (the existence of relationship between issuing Sukuk and risk adjusted return and daily trading value of the company stock) are rejected.
Conclusion: This research concludes that there is no significant relationship between issuing Sukuk and risk-adjusted return. In addition, there is no significant relation between issuing Sukuk and daily trading value of the company stock. These results might be due to the fact that using such stock exchanges in Iran has just flourished; hence, the effects of applying these instruments are not yet specified for the investors.
 

Keywords

Main Subjects

References

References
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Financial Research Journal
Volume 20, Issue 4
2018
Pages 427-444

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