IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-03049612.html

Is Being Sharia compliant worth it?

Author

Listed:
  • Jamil Jaballah
  • Jonathan Peillex

    (CRIISEA - Centre de Recherche sur les Institutions, l'Industrie et les Systèmes Économiques d'Amiens - UR UPJV 3908 - UPJV - Université de Picardie Jules Verne)

  • Laurent Weill

    (LARGE - Laboratoire de Recherche en Gestion et Economie - UNISTRA - Université de Strasbourg)

Abstract

We investigate the effect of Sharia compliance on stock valuations. To this end, we examine the price effects of additions to and deletions from the Dow Jones Islamic Market Index (DJIMI). Using the event study methodology, we measure abnormal returns for companies from Muslim countries and the US over the period of 2000 to 2017. We find that additions to the Islamic index lead to a positive stock market reaction in Muslim countries but a negative reaction in the US. Conversely, deletions from the Islamic index generate a negative stock market reaction but a positive one in the US. The differing valuation effects can be explained by different perceptions of investors. In Muslim countries, investors have a positive perception of the Sharia compliance because of religious beliefs, while in the US they negatively react because of a negative perception of Islam and of the restrictions associated with Sharia compliance.

Suggested Citation

  • Jamil Jaballah & Jonathan Peillex & Laurent Weill, 2018. "Is Being Sharia compliant worth it?," Post-Print hal-03049612, HAL.
    • Handle: RePEc:hal:journl:hal-03049612
    DOI: 10.1016/j.econmod.2018.02.011
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a
    for a similarly titled item that would be available.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Turki Rashed Alshammari & Jean-Noël Ory, 2023. "The Impact of Religious Announcements on Stock Prices and Investment Decisions on the Saudi Stock Exchange," Post-Print hal-04105704, HAL.
    2. El Ouadghiri, Imane & Peillex, Jonathan, 2018. "Public attention to “Islamic terrorism” and stock market returns," Journal of Comparative Economics, Elsevier, vol. 46(4), pages 936-946.
    3. Khoo, Shee-Yee & Klein, Paul-Olivier, 2025. "Islamic bonds ratings and the price of risk," Journal of Corporate Finance, Elsevier, vol. 93(C).
    4. Jonathan Peillex & Sabri Boubaker & Breeda Comyns, 2021. "Does It Pay to Invest in Japanese Women? Evidence from the MSCI Japan Empowering Women Index," Journal of Business Ethics, Springer, vol. 170(3), pages 595-613, May.
    5. Ooi, Chai-Aun & Hooy, Chee-Wooi, 2022. "Muslim CEOs, risk-taking and firm performance," Pacific-Basin Finance Journal, Elsevier, vol. 74(C).
    6. Erragragui, Elias & Peillex, Jonathan & Benlemlih, Mohammed & Bitar, Mohammad, 2023. "Stock market reactions to corporate misconduct: The moderating role of legal origin," Economic Modelling, Elsevier, vol. 121(C).
    7. Umi Widyastuti & Erie Febrian & Sutisna Sutisna & Tettet Fitrijanti, 2020. "Sharia Compliance in Sharia Mutual Funds: A Qualitative Approach," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(3), pages 19-27.
    8. Vincent Lavaine, 2020. "Intérêts et Limites de la labélisation du marché français de l'ISR," Working Papers hal-02494009, HAL.
    9. Peillex, Jonathan, 2022. "Comment expliquer la décision de création d’un fond éthique ? [What explain the creation of ethical funds?]," MPRA Paper 115067, University Library of Munich, Germany.
    10. Hassan, Kamrul & Hoque, Ariful & Gasbarro, Dominic & Wong, Wing-Keung, 2023. "Are Islamic stocks immune from financial crises? Evidence from contagion tests," International Review of Economics & Finance, Elsevier, vol. 86(C), pages 919-948.
    11. Peillex, Jonathan, 2023. "Réaction des investisseurs à la création de fonds éthiques [Investor reaction to the creation of ethical funds]," MPRA Paper 118930, University Library of Munich, Germany.
    12. Alexandra Huang, 2019. "Déterminants des encours nationaux socialement responsables : Une analyse exploratoire internationale," Working Papers hal-02242796, HAL.
    13. Peillex, Jonathan & El Ouadghiri, Imane & Gomes, Mathieu & Jaballah, Jamil, 2021. "Extreme heat and stock market activity," Ecological Economics, Elsevier, vol. 179(C).
    14. Budi Wahyono, 2023. "Do political connections affect the market reaction to firms’ inclusion in or exclusion from the Sharia index?," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 13(4), pages 835-854, December.
    15. Peillex, Jonathan & Erragragui, Elias & Bitar, Mohammad & Benlemlih, Mohammed, 2019. "The contribution of market movements, asset allocation and active management to Islamic equity funds’ performance," The Quarterly Review of Economics and Finance, Elsevier, vol. 74(C), pages 32-38.
    16. Delâtre, Chloë, 2022. "Désinvestissement des combustibles fossiles: quelles conséquences pour la gestion de portefeuille ? [Fossil fuel divestment and portfolios implications]," MPRA Paper 114633, University Library of Munich, Germany.
    17. Elias Erragragui & Jonathan Peillex & Mohammed Benlemlih & Mohammad Bitar, 2023. "Stock market reactions to corporate misconduct: The moderating role of legal origin," Post-Print hal-04124991, HAL.

    More about this item

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
    • Z12 - Other Special Topics - - Cultural Economics - - - Religion

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-03049612. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.