The relationship between shari’ah convergence and market-to-book value: A case study of firms in Islamic countries

This study ranks 1235 companies operating in 10 different Islamic countries according to their degree of Shari'ah convergence and investigates the relationship between a firm's market-to-book ratio and convergence to Shari'ah rules. We determine Shari'ah screening variables by re...

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Bibliographic Details
Published inBorsa Istanbul Review Vol. 24; no. 2; pp. 398 - 405
Main Authors Parlak, Deniz, Yildiz, Mehmet Emin, Yilmaz, Naci
Format Journal Article
LanguageEnglish
Published Elsevier B.V 01.03.2024
Subjects
CILOS technique
Market-to-book ratio
Shari'ah compliance
Shari'ah compliance
Market-to-book ratio
CILOS technique
G31
G32
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Summary:This study ranks 1235 companies operating in 10 different Islamic countries according to their degree of Shari'ah convergence and investigates the relationship between a firm's market-to-book ratio and convergence to Shari'ah rules. We determine Shari'ah screening variables by reviewing existing Shari'ah market indices and their screening rules; variable weights are determined using the criterion impact loss (CILOS) method, a well-known, multicriteria decision-making technique. The results show that the degree of Shari'ah convergence has a statistically significant negative effect on the market-to-book ratio, which can be seen as a proxy for the market value of equity.
ISSN:2214-8450
DOI:10.1016/j.bir.2024.02.001