The Theoretical Impact Of The Listing Of Syariah-Approved Stocks On Stock Price And Trading Volume

McGowan, Carl B.; Muhammad, Junaina

doi:10.19030/iber.v9i3.532

Cited by 18 publications

(21 citation statements)

References 23 publications

(15 reference statements)

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“…inclusion of new stocks in the FBM Shariah index. The findings are inconsistent with Sadeghi (2008) and Mcgowan and Muhammad (2010) that report the positive impact on stock prices when the stocks are announced as Shariah compliant stocks. The possible reasons could be due to insensitivity to market towards information on new Shariah compliant stocks.…”

Section: Resultscontrasting

confidence: 85%

“…This indicates that the investors react quickly to the deletion announcement by switching their investment in the other Shariah compliant stocks within 3 days before and after the announcement. The results are consistent with Sadeghi (2008), Mcgowan and Muhammad (2010) and Bacha and Abdullah (2001) who find that stocks that are no longer listed as Shariah compliant would experience a decrease in share price. This is consistent with the price pressure hypothesis that there will be a selling pressure in the market which leads to pushing the stock price down.…”

Section: = -supporting

confidence: 89%

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Revised Malaysian Shariah Screening: Its Impact on Islamic Capital Market

Nor¹,

Shaharuddin²,

Marzuki³

et al. 2019

RWE

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Shariah Advisory Council (SAC) of Securities Commission (SC) formulated a new revised Shariah screening methodology of two-tier quantitative assessment for activity-based screening benchmarks and the newly-formulated financial ratio benchmarks, while the qualitative assessment remains the same. The revised methodology is an effort to expand the Islamic capital market's (ICM) international reach which is in line with the SC objectives. The objective of this paper is to examine the impact of the recent announcement of new changes in the Shariah screening methodology by the Malaysian Securities Commission on the share prices of the affected companies and Islamic capital market. We use an event study method to see if the changes have a significant reaction from the market, specifically, from investors and fund managers. On the announcement date, that is, on 29 November 2013, 158 non-Shariah compliant stocks were removed from the previous list of Shariah compliant stock that was issued in May 2013 and 16 stocks were added to the approved list. Out of 158 non-Shariah compliant stocks, only 137 stocks are available for the analysis. For the new Shariah compliant stocks, only 16 stocks are included in the sample. We find an immediate but short lived negative impact on the stock returns towards the deletion, but none towards the addition of new stocks to the Shariah index. However, the announcement has no significant impact on the overall return of the FBM Emas Shariah index.

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Section: Resultscontrasting

confidence: 85%

Section: = -supporting

confidence: 89%

Revised Malaysian Shariah Screening: Its Impact on Islamic Capital Market

Nor¹,

Shaharuddin²,

Marzuki³

et al. 2019

RWE

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show abstract

“…It is consistent with finding found by [8] which found that stocks that are no longer listed as Shariah-compliant would experience a decrease in share price. Similarly, [9] also found that deletions as Shariah-compliant stocks experience negative impact. As mentioned by SC the investors are given six months from the effective date of the updated list (29 November 2013) to dispose of such securities.…”

Section: B Methodologymentioning

confidence: 88%

“…Similarly, an event such as the announcement of the Shariah-compliant list would affect an investor"s buying, holding or selling decision as a Shariah-compliant investor would be compelled to sell shares that are no longer listed as Shariah-compliant and substitute them with Shariah-compliant stocks. Therefore stocks that are no longer listed as Shariah-compliant would experience a decrease in share price and thus the stock returns as Shariah-compliant investors would be required to sell and invest in the other Shariah-compliant stocks that are available [9]- [11].…”

Section: Literature Reviewmentioning

confidence: 99%

The Effects of Shariah Compliance Announcement towards Stock Price Changes in Malaysia

Yazi¹

2015

JOEBM

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This paper seeks to investigate whether the announcement would affect the investors or funds managers' decision to buy, keep or sell stocks that are Shariah-compliant or non-Shariah compliant. The sample is based on the listed Shariah-compliant stocks (SCS) on 29 November 2013 which uses a revised methodology in screening stocks for Shariah-compliance. This has resulted a dramatic change to the number of Shariah compliant firms in Bursa Malaysia and for the first time it has caused a drastic removal of 158 previously Shariah compliant stocks from SAC's Shariah compliant list. Considering the revised screening methodology of the SC, this paper provides clear evidence that the inclusion of a stock in the Shariah-compliant list has a positive effect to the value of the stock while removal from the list negatively affects the price of the stock.

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“…Some researchers (Abbes, 2012) have also argued that the difference in performance between the two types of stocks should be minimal and some have argued that conventional stocks should outperform the Islamic stocks (McGowan & Junaina, 2010). However, only limited research has been undertaken to date that relate to conventional and Islamic stocks using comparative areas of sectorial/industry, market capitalisation, price earnings ratio, market to book value ratio, debt to equity, and returns.…”

Section: Introductionmentioning

confidence: 99%

Does Shariah Compliant Stocks Perform Better than the Conventional Stocks? A Comparative Study Stocks Listed on the Australian Stock Exchange

Fu²

2014

AJFA

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A rapid growth of Islamic finance in the past decades has motivated many investors to focus on Islamic stocks rather than conventional stocks. The argument whether the performance of Shariah compliant stocks are better compared to the conventional stocks still remains an open question. Therefore, this research examines whether there are differences in performance between the Shariah compliant stocks and the conventional stocks listed on the Australian Stock Exchange (ASX) for the period 2001-2013. Our findings show that there is a statistically significant difference in performance of the Islamic and conventional stocks listed on the ASX in terms of risk, otherwise the performance of the Islamic stocks tends to be similar to the conventional stocks. In addition, we report a statistically significant relationship between the returns of Shariah compliant and conventional stocks.

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The Theoretical Impact Of The Listing Of Syariah-Approved Stocks On Stock Price And Trading Volume

Abstract: ABSTRACT

Cited by 18 publications

References 23 publications

Revised Malaysian Shariah Screening: Its Impact on Islamic Capital Market

Revised Malaysian Shariah Screening: Its Impact on Islamic Capital Market

The Effects of Shariah Compliance Announcement towards Stock Price Changes in Malaysia

Does Shariah Compliant Stocks Perform Better than the Conventional Stocks? A Comparative Study Stocks Listed on the Australian Stock Exchange

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