Publication:
Sukuk announcement effects during financial crisis: the case for Indonesia
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Date
2018
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Abstract
The effects of capital-raising announcements have long been used as an indicator of increased shareholder wealth (Brown and Warner, 1985). Studies on bond announcements, for example, have been largely inconclusive. However, when effects are measured based on bond underlying structure, 'straight and convertible bonds', then the results are more conclusive (Abdul Rahim, 2012). Furthermore, issuances around crisis period are expected to result in negative market reaction as investors prefer liquidity (Fenn, 2000). Sukuk are bond-like instruments that are issued based on the Sharia guidelines and perceived to be less risky due to their risk sharing attribute. Sukuk are issued by the governments and also corporations. Sukuk can either be debt-based or equity-based. The former resembles the conventional bond, and equity-based Sukuk resembles the convertible bonds. It is interesting to ascertain the market reaction to issuance of both type of Sukuk. This study determines the wealth effects of debt-based Sukuk issuances in Indonesia, around crisis period. Sukuk issues have steadily increased in Indonesia, and it is the second largest issuer in 2015 (Zawya, 2015a, 2015b).
Keywords
Financial crisis , Indonesia , Sukuk , Announcement effect , Debt-based sukuk , Equity-based sukuk
Citation
Mahomed, Z., Ramadili Mohd, S. M., & Ariff, M. (2018). Sukuk announcement effects during financial crisis: the case for Indonesia. Journal of Islamic Accounting and Business Research, 9(4), pp. 567-586.
Publisher
Emerald Publishing Limited