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Dow Jones Islamic Index firms: how profitable are they?

Naseem Al Rahahleh (Department of Finance, King Abdulaziz University, Jeddah, Saudi Arabia)
Serkan Akguc (Business Administration, Carnegie Mellon University Qatar, Education City, Doha, Qatar)
Turki Abalala (King Abdulaziz University, Jeddah, Saudi Arabia)

International Journal of Islamic and Middle Eastern Finance and Management

ISSN: 1753-8394

Article publication date: 11 January 2021

Issue publication date: 4 June 2021




The purpose of this paper is to examine the operating performance of Dow Jones Islamic Index (DJII) firms vs non-DJII firms. It also explores the impact of the 2007–2008 financial crisis on the operating performance of firms included under DJII relative to a comparable set of firms (i.e. industry-size matched) that are not included in the DJII.


The final sample consisted of 1,128 unique firms (or 5,669 observations) in the DJII sample and 9,501 unique firms (or 55,889 observations) in the non-DJII sample. The paper uses a unique dataset from S&P’s Compustat North America database during the period of 2005–2014. This study uses univariate tests complemented with multivariate regression analysis to gain further insight into the influence of Shariah compliance on the operating performance of firms during the crisis.


The paper shows that DJII firms were more profitable than non-DJII firms during the sample period. In addition, DJJI firms’ profitability was not affected as much during the financial crisis as non-DJII firms. This finding is robust to various model specifications and to alternative definitions of operating profitability.

Research limitations/implications

Corporate governance and managerial characteristics and the possible effects of these on operational performance are not considered herein.

Practical implications

Investors and fund managers could benefit from investing in Islamicly permissible equity funds when constructing investment portfolios in regard to asset allocation and policy responses to financial crises.


The present paper uses a unique sample and timeframe to show that the characteristics that makes a firm Shariah-compliant also leads to much higher operating profitability and reduces the impact of the financial crisis on firm profitability.



This Project was funded by the Deanship of Scientific Research (DSR) at King Abdulaziz University, Jeddah, under grant no.G-662–120-38. The authors, therefore, acknowledge with thanks DSR for technical and financial support.


Al Rahahleh, N., Akguc, S. and Abalala, T. (2021), "Dow Jones Islamic Index firms: how profitable are they?", International Journal of Islamic and Middle Eastern Finance and Management, Vol. 14 No. 3, pp. 463-481.



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