MARKET REACTIONS TOWARDS THE ANNOUNCEMENT OF SUKUK ISSUANCE: EVIDENCE FROM GULF MARKETS

Abstract

Sukuk (Islamic bonds) emerged as a revolutionary financial instrument over the last years and
is considered as the flagship capital market instrument of the Islamic finance industry.
However, the understanding of it is still limited compared to conventional bonds. This study
aims to investigate whether the announcements of Sukuk issuance that carry any new
information can create impact on the market’s reactions using 42 Sukuk announcements over
the period of 2010 to 2019 in four Gulf financial markets. It is revealed the absenteeism of
significant abnormal returns across asymmetric and symmetric event windows for periods
before and after the announcement date, concluding no wealth effect. Within the equity
marketplace, these results will be of practical relevance to corporations, practitioners and
decision-makers.