What is it about?
This study investigates whether Sharia status can serve as a reliable indicator of firm quality for investors evaluating IPOs in the Malaysian market, where information asymmetry is prevalent. By signaling firm quality, Sharia status can help investors make more informed decisions and potentially reduce underpricing, which is a common issue in IPOs due to the difficulty in assessing true value.
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Why is it important?
Despite the widespread acceptance of Sharia-compliant status both in Asia and globally. The existing literature has largely emphasized the potential of Sharia-compliant status to signal the quality of the issuing firm and mitigate the information asymmetry surrounding its offerings. This research stands as one of the pioneering efforts to examine the signalling role of Sharia-compliant status within the domain of the IPO market.
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This page is a summary of: An insight into the signaling role of Sharia status: a case from an emerging IPO market, International Journal of Islamic and Middle Eastern Finance and Management, August 2024, Emerald,
DOI: 10.1108/imefm-08-2023-0290.
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