Publication:
Sukuk credit rating: determinants and wealth effect in the pre and post Shariah governance reform
Abstract
This research investigates the determinants of Malaysian Sukuk’ credit rating by studying firm financial characteristic, corporate governance attributes, macroeconomic factors, and Sukuk structures. The sukuk structures determinants examine during the pre- and post-Shariah governance reform period (SG2010) to ascertain the effectiveness of the governance reform. Lastly, this research investigates the wealth effects of change in Sukuk ratings (upgrading or downgrading). Both listed and unlisted firms are analysed, with total 328 sukuk issuances and 1110 sukuk rating announcements from 2009 to 2014. Ordered logit regression and generalized ordered logit regression are used to explain the impact of different determinants on sukuk credit rating. Event study methodology was applied to ascertain the wealth effect of 16 sukuk upgrade and 20 sukuk downgrade announcements. The results on determinants of sukuk credit ratings indicate that a positive sukuk credit rating is associated with financial information, governance attributes, and sukuk structure whilst the macroeconomic factors did not influence sukuk credit ratings. More precisely, firm size, profitability, and leverage had significant positive effect on sukuk credit rating for listed firms whilst only firm profitability had a positive effect on sukuk credit rating for unlisted firms.
Keywords
Sukuk credit rating , Sukuk , Shariah governance , Malaysia
Citation
Al Homsi, M. (2017). Sukuk credit rating: determinants and wealth effect in the pre and post Shariah governance reform (Doctoral dissertation). INCEIF, Kuala Lumpur. Retrieved from https://ikr.inceif.edu.my/handle/INCEIF/2751
Publisher
INCEIF
Available in physical copy and downloadable format (Call Number: t HG 4651 A397)