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Religion, governance and performance: evidence from Islamic and conventional stock exchanges

Author

Listed:
  • Maurizio Polato

    () (University of Udine)

  • Josanco Floreani

    () (University of Udine)

  • Andrea Paltrinieri

    () (University of Udine)

  • Flavio Pichler

    () (University of Verona)

Abstract

Abstract Based on a dataset of 31 conventional and Islamic stock exchanges we compare financial performance across these two groups for 2007–2011 period. Our results suggest that CEs and IEs are differently exposed to institutional constraints and have different drivers of profitability. Islamic stock exchanges’ performances are essentially driven by traditional listing and trading services and are affected by institutional factors such as the degree of foreign trading openness of their economies and measures of society development. Furthermore, they ensure greater stability during crisis, although Shari’ah compliant investments don’t affect their revenue generation. Conventional stock exchanges have higher trading intensity, higher level of revenues’ diversification and high capital investments, as they operate with different business models. Our results could have relevant business and strategic implications for further convergence between the two groups. Moreover our analysis could be significant for firms wishing to list their shares into Shari’ah Compliant Stock Exchanges or into Conventional ones and traders choosing the most convenient trading venue.

Suggested Citation

  • Maurizio Polato & Josanco Floreani & Andrea Paltrinieri & Flavio Pichler, 2016. "Religion, governance and performance: evidence from Islamic and conventional stock exchanges," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 20(3), pages 591-623, September.
  • Handle: RePEc:kap:jmgtgv:v:20:y:2016:i:3:d:10.1007_s10997-015-9312-6
    DOI: 10.1007/s10997-015-9312-6
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    References listed on IDEAS

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    More about this item

    Keywords

    Islamic stock exchanges; Shari’ah compliant finance; Conventional stock exchanges; Performance; Governance;

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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