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Journals / İslam Ekonomisi Dergisi / 2021 / Cilt: 1 Sayı: 2

Shariah Compliance Status and Value of Analysts’ Recommendation Revisions: Evidence from Malaysia

Murat Yaş(Marmara University, The Institute of Banking and Insurance)0000-0002-2282-6423
Mohamed Eskandar Shah(INCEIF)0000-0002-7058-9362
Pages
1–34
Publication Date
2021-07-15
DOI
—
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AI Summary & Key Takeaways

AI Insight
⚡ TL;DR(Too Long; Didn't Read)

The results show that earnings announcements can trigger analysts’ recommendation revisions because the investors react strongly to analysts’ recommendation revisions issued contemporaneously with earnings announcements.

📌 3 Key Takeaways

🎯
Objective & Hypothesis:This study examines the effect of 1096 analyst recommendation revisions on prices of Shariah-compliant and Shariah non-compliant listed securities in Bursa Malaysia over the period 2005-2016.
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Key Findings & Data:Secondly, the study examined the effect of analysts’ recommendation revisions issued contemporaneously with earnings announcements and without earnings announcements on price reactions over various time horizons.
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Conclusion & Impact:The results show that earnings announcements can trigger analysts’ recommendation revisions because the investors react strongly to analysts’ recommendation revisions issued contemporaneously with earnings announcements.
🔬Design:Araştırma Makalesi
📍Scope:2005-2016 Verileri
⚙️Variables:Analysts · Forecasts · Revisions

Abstract

This study examines the effect of 1096 analyst recommendation revisions on prices of Shariah-compliant and Shariah non-compliant listed securities in Bursa Malaysia over the period 2005-2016. The study finds that while stocks added-to-buy had positive abnormal returns, the stocks added-to-sell and remove-from-buy had negative abnormal returns in short- and long-term horizons. This finding shows that analysts’ recommendation revisions carry valuable information. Secondly, the study examined the effect of analysts’ recommendation revisions issued contemporaneously with earnings announcements and without earnings announcements on price reactions over various time horizons. The results show that earnings announcements can trigger analysts’ recommendation revisions because the investors react strongly to analysts’ recommendation revisions issued contemporaneously with earnings announcements. We find that performance differences of Shariah-compliant and Shariah non-compliant stocks in response to analysts’ recommendation revisions are often negligible. Overall, this study provides empirical evidence that analysts’ recommendation revisions for Shariah-compliant companies often do not own any additional investment value than those for Shariah non-compliant stocks.

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Cite This Article

Yaş, M., Shah, M. E. (2021). Shariah Compliance Status and Value of Analysts’ Recommendation Revisions: Evidence from Malaysia. İslam Ekonomisi Dergisi, Cilt: 1 Sayı: 2, 1–34. https://ajindex.com/articles/1501344

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