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The Impact of firms' compliance to shariah on stock price synchronicity
The continuous growth in Islamic finance over the past decades grabbed the interest of empirical researchers who investigated different aspects of Shariah compliant firms. In this thesis, we are interested to explore the impact of Shariah compliance on stock price synchronicity and informativeness....
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| Format: | Thesis |
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AUC Knowledge Fountain
2020
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| Summary: | The continuous growth in Islamic finance over the past decades grabbed the interest of empirical researchers who investigated different aspects of Shariah compliant firms. In this thesis, we are interested to explore the impact of Shariah compliance on stock price synchronicity and informativeness. Our rational is that Shariah standard forced compliant firms to release more firm-specific information compared with conventional ones and given that Shariah compliant firms are more associated with information transparency taking into consideration the impact of the Shariah on the governance of the compliant firms. We claim that these features of Shariah compliant firms lead to less price synchronicity compared with conventional firms. We use data from 11 emerging and developed countries for the period of 2000 to 2018. Our findings suggest that firms' compliance to Shariah has a significant negative impact on stock price synchronicity confirming that Shariah compliance decreases the co-movements of the stocks. The results are consistent with the unique characteristics and the financial ratio constrains of compliant firms increase the information transparency and accuracy. |
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