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Islamic Corporate Governance: Risk-Sharing and Islamic Preferred Shares الأسهم التفضيلية الإسلامية

In: Lectures in Islamic Economics and Finance, Selected From Wednesday Seminars-08 محاضرات في الاقتصاد والتمويل الإسلامي ، مختارة من حوارات الأربعاء - 08

Author

Listed:
  • Mohammad Al-Suhaibani

    (Department of Finance and Investment, College of Economics and Administrative Sciences, Al-Imam Mohammad Ibn Saud Islamic University (IMSIU), Riyadh, Saudi Arabia)

  • Nader Naifar

    (Department of Finance and Investment, College of Economics and Administrative Sciences, Al-Imam Mohammad Ibn Saud Islamic University (IMSIU), Riyadh, Saudi Arabia)

Abstract

The recent financial crises (including the Asian and subprime crises) indicated the need to reinforce corporate governance mechanisms in emerging and developed market economies. Corporate governance refers to all the factors that affect firm processes (including, among others, financing strategies). Firms must avoid debt financing instruments and adopt financing instruments that allow for "risk-sharing" rather than "risk-shifting" because all recent financial crises were, in essence, debt crises. The primary objective of this paper is to examine the principles of risk-sharing promoted by Islamic finance and study their implications for corporate governance. The secondary objective of this paper is to propose a pricing model for a new risk-sharing financial instrument (Islamic Preferred Shares, IPS) that was recently discussed by Zarka and Al-Suhaibani (2012). We study the implications of this new instrument as a powerful tool for corporate governance in the case of Islamic markets. We explain the possible contribution of IPS to agency cost reduction, Sharia screening costs and ethical corporate governance. تستخدم الأسهم التفضيلية (=الممتازة) على نطاق واسع من قبل مديري صناديق رأس المال الجريء، لتفضيل أصحاب هذه الأسهم على نظرائهم من أصحاب الأسهم العادية في عدة أمور، أهمها: التفضيل في الأرباح والأولوية على الأسهم العادية في المطالبة بأصول الشركة في حالة تصفيتها. وتعد الأسهم التفضيلية ممنوعة فقهًا لما تتضمنه من غرر (لأن التفضيل في الربح قد يؤدي إلى قطع المشاركة في الربح) وربا (لأن التفضيل عند التصفية يحول حملة الأسهم التفضيلية من شركاء إلى مقرضين). وقدم العرض صيغة مقترحة لأسهم تفضيلية متوافقة مع الشريعة، تتميز بالقدرة على تفريع تدفقات الأرباح إلى تيارين: أحدهما أقل مخاطرة من الآخر، ما يمكّن الشركات المتمولة من جذب مستثمرين جدد لهم تفضيلات أو توقعات مختلفة للمخاطر. وتساعد الصيغة المقترحة في حال نجاح تطبيقها على توسيع دائرة التمويل بالمشاركة في الأسواق المالية. كما شمل العرض انعكاسات الأسهم التفضيلية الإسلامية على حوكمة الشركات، وخاصة أثرها في خفض تكاليف الوكالة، وتكاليف الفرز الشرعي لأسهم الشركات، وتعزيز البعد الأخلاقي لتمويل الشركات. وأخيرًا قدم العرض نموذجًا مقترحًا لتسعير هذه الأسهم ينطلق من النماذج الشائعة لتسعير منتجات التمويل المهيكلة.

Suggested Citation

  • Mohammad Al-Suhaibani & Nader Naifar, 2014. "Islamic Corporate Governance: Risk-Sharing and Islamic Preferred Shares الأسهم التفضيلية الإسلامية," Chapters of books published by the Islamic Economics Institute, KAAU or its faculty members., in: Islamic Economics Institute (ed.),Lectures in Islamic Economics and Finance, Selected From Wednesday Seminars-08 محاضرات في الاقتصاد والتمويل الإسلامي ، مختارة من حوارات الأربعاء - 08, edition 0, chapter 21, pages 245-268, King Abdulaziz University, Islamic Economics Institute..
    • Handle: RePEc:abd:ieibch:766
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    References listed on IDEAS

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    1. Mr. Juan Sole & Andreas Jobst, 2012. "Operative Principles of Islamic Derivatives: Towards a Coherent Theory," IMF Working Papers 2012/063, International Monetary Fund.
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    Cited by:

    1. Tasawar Nawaz, 2019. "Exploring the Nexus Between Human Capital, Corporate Governance and Performance: Evidence from Islamic Banks," Journal of Business Ethics, Springer, vol. 157(2), pages 567-587, June.
    2. Elnahas, Ahmed M. & Kabir Hassan, M. & Ismail, Ghada M., 2017. "Religion and mergers and acquisitions contracting: The case of earnout agreements," Journal of Corporate Finance, Elsevier, vol. 42(C), pages 221-246.
    3. Alexakis, Christos & Kenourgios, Dimitris & Pappas, Vasileios & Petropoulou, Athina, 2021. "From dotcom to Covid-19: A convergence analysis of Islamic investments," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 75(C).
    4. Budi Wahyono, 2022. "The value of political connections and Sharia compliance during the COVID-19 pandemic," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 12(1), pages 1-28, March.
    5. Fatin Fadhilah Hasib, 2017. "Islamic Model of Corporate Governance at The Islamic Boarding School," GATR Journals jber127, Global Academy of Training and Research (GATR) Enterprise.
    6. Aziz, Saqib & Ashraf, Dawood & El-Khatib, Rwan, 2021. "Societal trust and Sukuk activity," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 74(C).
    7. Park, Kathleen Marshall & Meglio, Olimpia & Schriber, Svante, 2019. "Building a global corporate social responsibility program via mergers and acquisitions: A managerial framework," Business Horizons, Elsevier, vol. 62(3), pages 395-407.
    8. Ahmed Hassanein & Mohamed M. Mostafa, 2023. "Bibliometric network analysis of thirty years of islamic banking and finance scholarly research," Quality & Quantity: International Journal of Methodology, Springer, vol. 57(3), pages 1961-1989, June.

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