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Not one but three decisions in sukuk issuance: Understanding the role of ownership and governance

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  • Ashraf, Dawood
  • Rizwan, Muhammad Suhail
  • Azmat, Saad

Abstract

This paper examines the determinants of three decisions modelled simultaneously: sukuk issuance, choice of a particular sukuk structure, and the volume of sukuk engagements. By using a sample of 736 non-financial listed Malaysian firms from 2008 to 2014, we test whether ownership structure and governance mechanism affect the different aspects of sukuk financing decision. In line with the monitoring hypothesis, we find that higher government ownership positively influences the decision to participate and to issue Murabaha sukuk with higher volumes. Aligned with the complementary hypothesis of corporate governance, we find that firms with a higher proportion of independent board member and superior audit-related governance are more likely to issue sukuk with higher volumes. Furthermore, board ethnicity influences the sukuk choice decision and prefers Musharakah sukuk.

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  • Ashraf, Dawood & Rizwan, Muhammad Suhail & Azmat, Saad, 2021. "Not one but three decisions in sukuk issuance: Understanding the role of ownership and governance," Pacific-Basin Finance Journal, Elsevier, vol. 69(C).
    • Handle: RePEc:eee:pacfin:v:69:y:2021:i:c:s0927538x19306377
    DOI: 10.1016/j.pacfin.2020.101423
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