Sukuk Issuance and Firm Value: Global Evidence

The increasing use of Sukuks as capital raising instruments is no doubt having a positive effect on the fund management industry and the Islamic capital market, but its effect on shareholders’ wealth is unclear especially during volatile global financial market. This paper study the impact of Sukuk and conventional bonds announcement on shareholder wealth and their determinants using 79 sukuks and 87 conventional bonds over the period of 2004-2012 in six developed Islamic financial market. The overall time frame is divided into three parts, 2004-2006 (pre-crisis); 2007-2009 (during crisis) and 2010-2012 (post-crisis). It is revealed that the market reaction is negative for the announcements of sukuk before and during 2007 global financial crisis. On the other hand market reaction is positive for announcement of conventional bond before the crisis period and negative during and after crisis periods. The bond offering size appears to have a negative impact on the cumulative abnormal retu