2023
DOI: 10.1108/jiabr-07-2022-0165
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Effect of Shariah compliance on financing decisions: empirical evidence from GCC

Abstract: Purpose The purpose of this study is to examine the effect of companies’ Shariah compliance (SC) debt financing decisions, financing with retained earnings (REs), cash holdings, capital expenditures and dividend pay-out policies. Design/methodology/approach The sample consisted of 1,648 firm-year observations of GCC non-financial firms from various industries. The authors scrutinised the firms over a period of eight financial years from 2012 to 2019. To analyse the research hypotheses, the authors used a pan… Show more

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Cited by 5 publications
(4 citation statements)
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“…This is worthy of recommendation for Nigeria who is just eying up towards the real debt management system. It is worthy of note that under Shari'ah Debt Management, maqasid al-shari'ah aims at protecting wealth (being one of the main objectives), borrowing to keep the wealth safe maybe a positive impact while excessive borrowing may be seen in the negative (Tawfik & Elmaasrawy, 2023) Islamic law (fiqh) contains considerations of requirements (daruriyvat), conveniences (hajiyyat), and refinements. The effect of the external debt crisis is most likely to undermine the riches and dignity of the nation (tahsiniyyat) (Tawfik & Elmaasrawy, 2023).…”
Section: Islamic Law (Shari'ah) and Debt Managementmentioning
confidence: 99%
See 1 more Smart Citation
“…This is worthy of recommendation for Nigeria who is just eying up towards the real debt management system. It is worthy of note that under Shari'ah Debt Management, maqasid al-shari'ah aims at protecting wealth (being one of the main objectives), borrowing to keep the wealth safe maybe a positive impact while excessive borrowing may be seen in the negative (Tawfik & Elmaasrawy, 2023) Islamic law (fiqh) contains considerations of requirements (daruriyvat), conveniences (hajiyyat), and refinements. The effect of the external debt crisis is most likely to undermine the riches and dignity of the nation (tahsiniyyat) (Tawfik & Elmaasrawy, 2023).…”
Section: Islamic Law (Shari'ah) and Debt Managementmentioning
confidence: 99%
“…It is worthy of note that under Shari'ah Debt Management, maqasid al-shari'ah aims at protecting wealth (being one of the main objectives), borrowing to keep the wealth safe maybe a positive impact while excessive borrowing may be seen in the negative (Tawfik & Elmaasrawy, 2023) Islamic law (fiqh) contains considerations of requirements (daruriyvat), conveniences (hajiyyat), and refinements. The effect of the external debt crisis is most likely to undermine the riches and dignity of the nation (tahsiniyyat) (Tawfik & Elmaasrawy, 2023). Each of these falls within the umbrella of what has been referred to as necessities, which excludes luxuries and status symbols, according to the fuqaha' (jurists).…”
Section: Islamic Law (Shari'ah) and Debt Managementmentioning
confidence: 99%
“…Emerging markets have seen massive growth of Islamic firms with debt restrictions that come along with relative tax disadvantages when compared to traditional non-Islamic firms [1]. Previous studies indicate that Shariah-compliant firms tend to have low levels of debt (Tawfik and Elmaasrawy, 2023;Anwer et al, 2021). This results in a negative effect of Shariah compliance on debt financing decision.…”
Section: Introductionmentioning
confidence: 99%
“…Shariah-compliant firms also are prone to have low account receivables and low cash. This causes a positive influence of Shariah compliance on financing decision with retained earnings, cash holdings and capital expenditures (Tawfik and Elmaasrawy, 2023). Despite some of these studies, past research have not highlighted the impact of corporate tax on capital structure for Shariah compliant companies, which adds to the motivation for this research.…”
Section: Introductionmentioning
confidence: 99%