Investment opportunities and stock liquidity

Evidence from DJIM index additions in the Persian Gulf States

Mehdi Sadeghi*

*Corresponding author for this work

Research output: Contribution to journalArticle

4 Citations (Scopus)

Abstract

This paper investigates the impacts of index additions on the return and liquidity of Shariah-compliant shares in Kuwait, Oman, Qatar, and UAE. The author uses the sample of companies added to the Dow Jones Islamic Market index over the period of January 2008-December 2009. The findings show that stock prices respond positively to index addition events. However, evidence in support of the changes in the liquidity of added shares is mixed, depending on the country and the liquidity measures. These findings have important implications for Shariah-complaint investors, showing that companies whose activities reflect the beliefs and ethos of their investors in the Middle East may also be attractive from an investment point of view.

Original languageEnglish
Pages (from-to)53-62
Number of pages10
JournalInvestment Management and Financial Innovations
Volume8
Issue number1
Publication statusPublished - 2011

Keywords

  • Abnormal returns
  • Event study
  • Index addition
  • Liquidity effects
  • Shariah-compliant investment

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