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Firm risk and corporate policies: From the shariah certification perspective

In this study, we show that Shariah certification leads to risk-reduction benefits. Shariah-compliant firms are negatively related to firm risk; and tolerate lower risk than non-Shariah-complaint firms. This evidence is in line with Shariah principles that prohibit controversial business activities...

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Main Authors: Lee, Karren Hwei Khaw, Nordin, Sabariah, Wong, Woei Chyuan
格式: Article
语言:English
出版: Universiti Malaysia Sarawak 2019
主题:
HB Economic Theory
在线阅读:http://repo.uum.edu.my/27420/1/IJBS%2020%203%202019%201257%201275.pdf
http://repo.uum.edu.my/27420/
http://www.ijbs.unimas.my/index.php/content-abstract/current-issue/641-firm-risk-and-corporate-policies-from-the-shariah-certification-perspective
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spelling my.uum.repo.274202020-09-15T01:18:56Z http://repo.uum.edu.my/27420/ Firm risk and corporate policies: From the shariah certification perspective Lee, Karren Hwei Khaw Nordin, Sabariah Wong, Woei Chyuan HB Economic Theory In this study, we show that Shariah certification leads to risk-reduction benefits. Shariah-compliant firms are negatively related to firm risk; and tolerate lower risk than non-Shariah-complaint firms. This evidence is in line with Shariah principles that prohibit controversial business activities and uncertainties. In brief, excessive risk-taking is discouraged. Therefore, Shariah-compliant firms need to be selective in making investment decisions. We further find that the negative relation applies particularly to Shariah-compliant firms that managed to retain their Shariah-compliant status in the subsequent reviews. This implies that these firms consistently maintain lower level of risk to retain their Shariah status. In terms of the corporate policies, we do not find evidence that Shariah-complaint firms employ conservative financial and operating leverages to mitigate their firm risk. Instead, Shariah-compliant firms emphasize on capital expenditures that lead to lower firm risk. Taken together, our results recommend that Shariah-screening process can be a significant mechanism to mitigate excessive risk. Universiti Malaysia Sarawak 2019 Article PeerReviewed application/pdf en http://repo.uum.edu.my/27420/1/IJBS%2020%203%202019%201257%201275.pdf Lee, Karren Hwei Khaw and Nordin, Sabariah and Wong, Woei Chyuan (2019) Firm risk and corporate policies: From the shariah certification perspective. International Journal of Business and Society, 20 (3). pp. 1257-1275. ISSN 1511-6670 http://www.ijbs.unimas.my/index.php/content-abstract/current-issue/641-firm-risk-and-corporate-policies-from-the-shariah-certification-perspective
institution Universiti Utara Malaysia
building UUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Utara Malaysia
content_source UUM Institutional Repository
url_provider http://repo.uum.edu.my/
language English
topic HB Economic Theory
spellingShingle HB Economic Theory
Lee, Karren Hwei Khaw
Nordin, Sabariah
Wong, Woei Chyuan
Firm risk and corporate policies: From the shariah certification perspective
description In this study, we show that Shariah certification leads to risk-reduction benefits. Shariah-compliant firms are negatively related to firm risk; and tolerate lower risk than non-Shariah-complaint firms. This evidence is in line with Shariah principles that prohibit controversial business activities and uncertainties. In brief, excessive risk-taking is discouraged. Therefore, Shariah-compliant firms need to be selective in making investment decisions. We further find that the negative relation applies particularly to Shariah-compliant firms that managed to retain their Shariah-compliant status in the subsequent reviews. This implies that these firms consistently maintain lower level of risk to retain their Shariah status. In terms of the corporate policies, we do not find evidence that Shariah-complaint firms employ conservative financial and operating leverages to mitigate their firm risk. Instead, Shariah-compliant firms emphasize on capital expenditures that lead to lower firm risk. Taken together, our results recommend that Shariah-screening process can be a significant mechanism to mitigate excessive risk.
format Article
author Lee, Karren Hwei Khaw
Nordin, Sabariah
Wong, Woei Chyuan
author_facet Lee, Karren Hwei Khaw
Nordin, Sabariah
Wong, Woei Chyuan
author_sort Lee, Karren Hwei Khaw
title Firm risk and corporate policies: From the shariah certification perspective
title_short Firm risk and corporate policies: From the shariah certification perspective
title_full Firm risk and corporate policies: From the shariah certification perspective
title_fullStr Firm risk and corporate policies: From the shariah certification perspective
title_full_unstemmed Firm risk and corporate policies: From the shariah certification perspective
title_sort firm risk and corporate policies: from the shariah certification perspective
publisher Universiti Malaysia Sarawak
publishDate 2019
url http://repo.uum.edu.my/27420/1/IJBS%2020%203%202019%201257%201275.pdf
http://repo.uum.edu.my/27420/
http://www.ijbs.unimas.my/index.php/content-abstract/current-issue/641-firm-risk-and-corporate-policies-from-the-shariah-certification-perspective
_version_ 1678594988792872960
score 13.250246

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