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Prestige Signals in IPOs: A Comparative Analysis of Sharia-Compliant vs. Non-Sharia-Compliant Offerings

In: Islamic Financial Markets and Institutions

Author

Listed:
  • Ali Albada

    (Sohar University)

  • Khalid Al. Qatiti

    (Sohar University)

  • Nurhatiah A. Chukari

    (Universiti Sains Islam Malaysia)

  • Nurhuda Nizar

    (Universiti Teknologi MARA)

  • Yusuf Karbhari

    (Cardiff University)

Abstract

The aims of this empirical study are twofold. First, we investigate whether religiously motivated Sharia-compliant IPOs influence the initial returns of IPOs under the signalling theory assumptions. Second, we examine the influencing effect of prestige signals on IPO initial returns for both Sharia- and non-Sharia-compliant IPOs. Our study sample covers the period from January 2000 to December 2018 and includes a total of 453 IPOs, of which 267 IPOs operate under Sharia-compliant status. The results find compelling evidence that Sharia-compliant status does not significantly influence initial returns, but board reputation and underwriter reputation does impact initial returns under both the Sharia sample and non-Sharia sample, respectively. In addition, Sharia-compliant IPOs are predominantly driven by demand, supply, offer price, and listing board, while non-Sharia IPOs are motivated by demand, supply, offer price, and risk.

Suggested Citation

  • Ali Albada & Khalid Al. Qatiti & Nurhatiah A. Chukari & Nurhuda Nizar & Yusuf Karbhari, 2025. "Prestige Signals in IPOs: A Comparative Analysis of Sharia-Compliant vs. Non-Sharia-Compliant Offerings," Contributions to Economics, in: Farhad Taghizadeh-Hesary & Hassanudin Mohd Thas Thaker & M. Ishaq Bhatti & Anwar Allah Pitchay (ed.), Islamic Financial Markets and Institutions, chapter 0, pages 317-334, Springer.
    • Handle: RePEc:spr:conchp:978-981-96-8650-6_15
    DOI: 10.1007/978-981-96-8650-6_15
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