Conventional Stocks, Shari'ah Compliant Stocks. Unexpected Changes in Dividend Announcements, Cumulative Abnormal Returns.


Numerous studies have been conducted in Islamic compliant securities, and yet the debate surrounding whether these securities have a significant influence on the stock market rages on. This paper therefore examines the effects of changes in dividend announcements in respect to the conventional and Shari’ah compliant stocks on Malaysian stock market returns. In addition, the investigation will be conducted based on five different economic conditions namely for the: (1) overall period (1990-2010); (2) before the Asian financial crisis (1990-1996); (3) during the Asian financial crisis (1997-1998); (4) after the Asian financial crisis (1999-2007); and (5) during the global financial crisis (2008-2010).Our findings reveal that the changes in dividend announcements of Shari’ah compliant stocks had a significant effect on the Malaysian stock market returns compared to the conventional stocks for every economic condition, except for the period during the global financial crisis. The findings indicate that the Malaysian investors are more sensitive with changes in dividends of Shari’ah compliant stocks rather than the conventional stocks.

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