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This study investigates the influence of corporate income tax on two corporate financial decisions — dividend and capital structure policies, particularly for Shariah compliant companies in Malaysia.

The study considered data from a sample of 529 Malaysian listed companies from four industrial sectors from 2007–2021 (6,746 company-year observations, before eliminating outliers). Panel models such as Fixed Effect and Random effect models were used. The study specifically tested the effect of corporate income tax on dividend and capital structure policies for Shariah compliant companies (3,148 observations) and controlled for industrial sectors.

(1) Firms are mostly Shariah-compliant, less liquid, less profitable and smaller in size, (2) Broadly when analysed together, tax has no impact on debt-equity ratio while it has an impact on dividend per share, (3) However, when tested separately for Shariah compliant companies, the influence of effective tax on capital structure is very evident but not for dividend and (4) influence of industrial sector on the relationship between corporate tax and capital structure and dividend policy is significant. Results indicate that Shariah firms might be raising debt to gain tax advantage. Companies in general pay dividends to avoid reputational damage.

This study assumes that leverage and dividend policy decisions are the main outcomes of the changing tax policies, while it seems that there could be other important outcomes that can be tested in future research. The study also shows the changing tax regimes of different ASEAN countries but they have not been tested to see the differences between countries. It will be indeed interesting for future researchers to focus on this aspect.

The findings contribute to the literature on tax planning of the Shariah-compliant firms, a high growth business segment in the Asian context. The study discussed potential tax-based Islamic market product development.

The purpose of this study is to look at how Shariah-compliant status and Shariah regulation affect the demand for initial public offerings (IPOs) in Pakistan. The Shariah-compliant status, which is seen as a method that offers a credible signal to investors, may explain the anomaly in IPO demand.

This research used multivariate and quantile regression models to assess data from 85 IPOs issued on the Pakistan Stock Exchange between 2000 and 2019.

Shariah-compliant status has a considerable negative association with IPO demand. Nevertheless, there is a considerable positive association among Shariah regulation and IPO demand. Furthermore, the interaction among regulatory quality and Shariah-compliant status has a considerable strong influence on IPO demand. As a consequence, the findings show that Shariah-compliant firms might possibly attract the attention of investors. Investors were found to concur on the amicability of rigorous rules and permissible Shariah-compliance aspects.

Future studies could analyse the financial ratio benchmark (cash and debt) to determine the Shariah-compliant status and Shariah regulation to better understand the problem of IPO demand in the context of Pakistan.

The outcomes of this research are useful for issuers and underwriters in comprehending the characteristics that influence high and early IPO success. Such knowledge may assist issuers and underwriters in responsibly planning and managing the IPO process.

The results may be useful to investors looking for critical information in prospectuses to make the best choice when subscribing to IPOs in Pakistan.

This is one of the first studies to provide empirical data on the links among Shariah-compliant status, Shariah regulation and IPO demand in Pakistan. Furthermore, this research demonstrates the interaction impact of regulatory quality and Shariah-compliant status on IPO demand.

This paper aims to examine the relationship between Shariah compliance and corporate capital structure decisions. This study explores the variation of capital structure speed of adjustment.

The authors’ sample includes a sample of the largest 200 nonfinancial firms trading in the Malaysian and Pakistan stock markets. This study uses ordinary least squares and dynamic two-step system generalized method of moments to test the hypotheses of the study.

The results show that Shariah-compliant firms use a lower level of leverage than the noncomplaint firms. Moreover, while both types of firms have optimal capital structures, the speed of adjustment toward the targets is slower for Shariah-complaint firms than non-Shariah-compliant firms. This variation can be seen through the different levels of market imperfection experienced by the two types of firms. Shariah-compliant firms follow Islamic rules that restrict the type and degree of leverage, thus affecting the availability of external funding to Shariah-compliant firms.

The findings call for more development and innovation of financing instruments that comply with Shariah rules that will increase of supply of external funds for Shariah-compliant firms and, thus, reduce market imperfections that are faced by Shariah-compliant firms.

The study contributes to the limited number of studies that examine the nexus between conventional corporate theories and Islamic corporate finance.

This study aims to examine the association between environmental, social and governance (ESG) performance and cash holdings, as well as whether this association is moderated by Shariah-compliant status. The aim was to test the joint effect of two ethical precepts, namely, the ESG and Shariah-compliant status, in explaining variations in cash holdings.

A sample set that consisted of 9,244 firm-year observations from 25 countries from 2016 to 2020 was analysed using regression analysis. Firm-level data were sourced from Thomson Reuters and Refinitiv databases, while country-level data were derived from the World Bank and Hofstede Insights websites.

Firms with greater ESG performances were found to have higher cash holdings. The positive association between ESG performance and cash holdings was greater for Shariah-compliant firms compared to non-Shariah-compliant firms. In support of the stakeholder theory, the evidence indicated that Shariah-compliant firms with higher ESG commitments also have higher cash holdings as part of their corporate strategy.

These findings provided further comprehension to investors that ESG practices among Shariah-compliant firms are essential information during investment decision-making processes.

These findings highlighted ethical corporate practices through two frameworks, namely, ESG commitment and Shariah compliance; hence, contributing towards strategies to reach the Sustainable Development Goal 16 of promoting just, peaceful and inclusive societies.

This study has focused on the motives for cash holdings by considering the ethical precepts embodying ESG and Shariah compliance to uphold the positive impact of high cash reserves.

This paper aims to provide a comprehensive investigation into the different roles of cash holding decisions on Shariah-compliant and non-Shariah-compliant firms’ performance. Therefore, the objective of this study is to analyze the significant relationship of liquidity on Shariah- and non-Shariah-compliant corporations.

This study sample includes non-financial firms listed in six Gulf Cooperation Council (GCC) markets between 2005 and 2019. The study uses panel fixed effects and the dynamic generalized method of moments (system-GMM) models to test the relationship between cash holding and firm performance. The firms’ performance is measured using four widely used proxies representing book and market measures of performance including return on assets, return on equity, earnings before interest and tax to total assets and Tobin’s Q.

The results explore that the nature of the relationship between cash holdings and performance varies across Shariah-compliant and non-Shariah-compliant firms. Specifically, cash holdings are positively and significantly related to Shariah-compliant firms’ performance. However, cash reserves are not significantly related to conventional firms’ performance. These findings indicate that Shariah-compliant firms rely more on their cash holdings to avoid costly and less available external financing, meet everyday business needs and invest in profitable projects. In contrast, the value for cash holding is less important for non-Shariah-compliant firms, as their external financing options are less restricted compared to Shariah-compliant firms.

This study is not free from limitations. More specifically, the sample of this study comprises of firms listed in GCC countries, which share common features. It would be interesting for future research to examine the linkage between cash holdings and Shariah-compliant and conventional firms’ performance by applying a larger sample, such as firms located in countries of the Organization of Islamic Cooperation.

The findings of this paper provide useful insights for managers and investors on the important role of cash management for Shariah-compliant firms. Policymakers and bankers need to develop Shariah-based financial products to ease Islamic financing sources. Moreover, the findings of this paper call for more research on the importance of liquidity management for Shariah-compliant firms.

This study extends the Islamic finance literature by exploring the key role of cash holdings to Shariah-compliant firms. To the best of the authors’ knowledge, this study is the first study to investigate cash holdings and performance between Shariah-compliant and non-Shariah-compliant firms.

The purpose of this paper is to document the performance of analysts' recommendations for shariah-compliant firms and non-shariah-compliant firms in the MENA region during the period between 2005 and 2009.

This paper uses post-recommendation market-adjusted returns as a measure of performance and computes returns for different holding periods. Significant positive (negative) returns following buy (sell) recommendation will indicate value relevance of these recommendations.

The results show that analysts are not able to make any value relevant recommendations for shariah-compliant firms. The author documents insignificant returns following analysts' buy and sell recommendations for shariah-compliant firms. In contrast to their performance for shariah-compliant firms, the results show that analysts are able to produce value relevant recommendations for non-shariah-complaint firms. The author reports significant returns following analysts' buy recommendations for non-shariah-complaint firms. The author also reports significantly positive spread between returns following analysts' buy and sell recommendations for non-shariah-compliant firms. Positive spread indicates that analysts are able to differentiate between well-performing and badly-performing non-shariah-compliant firms. Interestingly, in case of sell recommendations, the results show no significant value in analysts' sell recommendations for non-shariah-complaint firms.

The results imply that investors should not blindly follow analyst recommendations for shariah-compliant firms while making their investment decisions in the MENA region.

This paper makes detailed analysis of analyst recommendations for shariah-compliant firms and non-shariah-compliant firms in previously unexplored MENA region.

The purpose of this study is to measure the extent of voluntary disclosure in the 2009 annual reports of 108 Shariah‐compliant companies listed on the Kuwait Stock Exchange. The study aims to investigate three categories of voluntary disclosure: overall, conventional and Islamic disclosure.

Voluntary disclosure was measured using a self‐constructed index consisting of 132 items overall, 86 for conventional and 46 for Islamic information items. Annual reports were analyzed using descriptive statistics and t‐tests.

Results suggest that the mean overall voluntary disclosure by Shariah‐compliant companies is 15 percent, but 17 percent and 13 percent for the conventional and Islamic items, respectively. Voluntary disclosure of conventional items is comparable to extant studies, and higher than Islamic items.

The study uses annual reports from 2009 because they were the most recent data available on the listed companies at the beginning of the study. Since this study was undertaken before the Shariah Advisory Council of the Capital Market Authority was established on January 1, 2012, this imposes a limitation. Future study should replicate this study to assess differences with the existence of the Council.

The findings provide evidence that Shariah‐complaint companies lack voluntary disclosure, especially Islamic disclosure information. As a result, the findings should be useful to lawmakers in Kuwait for improving overall disclosure practices by Shariah‐compliant companies. Preparers may use the findings to match the amount of information in their annual reports with other companies to ensure capital sourcing. Investors may use the findings for understanding disclosure behavior of Shariah‐compliant companies in Kuwait. Such findings may assist them to diversify investment portfolios.

This study contributes to extending the Kuwaiti literature on disclosure, and fills a gap in empirical studies on Shariah‐compliant disclosure practices.

The purpose of this study is to investigate the difference between the determinants of cash holdings of Shariah-compliant and non-Shariah-compliant firms, for non-financial corporations in the Gulf Cooperation Council (GCC).

The data include all non-financial firms listed in six GCC markets over a period 2005–2019. The IdealRatings database is used to identify Shariah-compliant firms in the GCC. To examine the determinants of cash holdings, a static model is used. To confirm the applicability of the method applied, the Breusch–Pagan Lagrange Multiplier (LM) and Hausman (1978) are used to choose the most efficient and consistent static panel regression.

The results show that, for Shariah-compliant firms, the relevant determinants of cash holdings are leverage, profitability, capital expenditure, net working capital and operating cash flow. For non-Shariah-compliant firms, the only relevant determinants of cash holdings are leverage, net working capital and operating cash flow. The findings suggest that the cash holding decisions of Shariah-compliant firms can be best explained using the pecking order theory. This reveals that Shariah-compliant firms use liquid assets as their first financing option, due to the Shariah regulations.

Future studies may investigate the optimal levels of cash holdings and compare the adjustment speeds toward target cash holdings of both the Shariah-compliant firms and their conventional counterparts.

This study is the first to investigate the difference between the determinants of cash holdings of Shariah-compliant and non-Shariah-compliant firms.

The purpose of this paper is to examine the impact of Shariah-compliant status on oversubscription of initial public offerings (IPOs) in Malaysia. It is believed that the Shariah-compliant status serves as a platform that sends a credible signal to investors which could possibly explain the IPO oversubscription anomaly.

This study used a multivariate and quantile regression model which involved 252 IPOs listed on Bursa Malaysia from 2005 to 2015.

The results show a significant positive relationship between Shariah-compliant status and oversubscription ratio, which suggests that companies with Shariah status could draw the attention of the investors. Strict guidelines and permissible elements of Shariah-compliant are considered agreeable and amicable by the investors.

Future studies should look into financial ratio benchmark (cash and debt) for determining Shariah-compliant status to enhance the understanding of oversubscription of IPOs in Malaysia.

This study offers practical understanding to the issuers and underwriters on the factors that should be considered in assuring a good early performance of their issuance. Therefore, it will benefit the issuers and underwriters in managing and planning the IPO process carefully.

The results of this study provide a new insight for investors regarding important information found in the prospectus when making the decisions to subscribe to IPOs.

This paper is one of the first to provide an empirical evidence of the impact of Shariah-compliant status on oversubscription in the IPO market.

This study aims to investigate the effect of Shariah-compliant status and Shariah regulation on initial public offering (IPO) underpricing in Pakistan.

Besides the ordinary least square’s method, this study used quantile least squares as a robust approach and stepwise regression for further analysis to investigate the underpricing phenomenon in Pakistan. Data of 84 IPOs listed on Pakistan Stock Exchange from January 2000 to December 2018 were collected to determine the impact of Shariah-compliant status and Shariah regulation on IPO underpricing.

Results of the study show that Shariah-compliant status has a negative relationship but Shariah regulation has a positive relationship with IPO underpricing. Hence, it is contended that Shariah-compliant firms have lower asset volatility and uncertainty than non-Shariah-compliant firms because of less information asymmetry, resulting in lower underpricing. These Shariah-compliant firms provide signals of high-quality IPOs as they must comply with the strict guidelines issued by the Securities Exchange Commission of Pakistan in addition to being considered as amicable by investors. Further, this study suggests that investors are more attracted to Shariah-compliant firms than non-Shariah-compliant ones.

This study’s offers limited consideration of nonfinancial and financial characteristics that could influence the decision of investors to subscribe to IPOs. Besides, future studies could consider the screening benchmarks; for instance, debt and cash may explain the intensity of IPO initial return in Pakistan.

The present work empirically investigated the influence of Shariah-compliant status and Shariah regulation on IPO underpricing in Pakistan’s IPO market, which has been scarcely covered in the existing literature.