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Performance of Shariah vs Non-Shariah Firms: A Study of Manufacturing Sector in Malaysia

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  • Amjad Wajdi Noor Ahmad Kamal
  • Ameer Irfhan Arshad
  • Norliza Che-Yahya
  • Siti Sarah Alyasa-Gan

Abstract

This research aims to examine the differences in the determinants of performance between Shariah-compliant and non-Shariah-compliant firms. The changes in the Shariah screening technique in Malaysia since 2013 have significantly affected how firms that comply with the Shariah principles, as opposed to non-compliant firms, leading to the motivation of this research being conducted. This research employs panel data regression analysis to test its hypotheses. Compiling data from 142 manufacturing firms (71 Shariah-compliant and 71 non-Shariah-compliant firms) from 2012 to 2021, this research found that Shariah-compliant firm performance is significantly influenced by firm size, leverage, tangibility and efficiency. In contrast, non-Shariah-compliant firm performance is significantly influenced by leverage, tangibility, working capital and efficiency. This research contributes to relevant parties, such as the manufacturing firms and policymakers, in providing insights on the most relevant indicators affecting firm performance, specifically those in the manufacturing sector.

Suggested Citation

  • Amjad Wajdi Noor Ahmad Kamal & Ameer Irfhan Arshad & Norliza Che-Yahya & Siti Sarah Alyasa-Gan, 2023. "Performance of Shariah vs Non-Shariah Firms: A Study of Manufacturing Sector in Malaysia," Information Management and Business Review, AMH International, vol. 15(1), pages 149-163.
    • Handle: RePEc:rnd:arimbr:v:15:y:2023:i:1:p:149-163
    DOI: 10.22610/imbr.v15i1(I)SI.3395
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    References listed on IDEAS

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