Shariah-compliant investment and shareholders' value: an empirical investigation

This paper investigates the impact's of index additions on the return and liquidity of Shariah-compliant shares in Egypt and Jordan. We use the sample of companies added to the Dow Jones Islamic Market index over the period of January 2008-December 2009. Our findings show that stack prices respond positively to index addition events in these countries. Furthermore, our study -provides evidence in support of long-term increases in the returns and liquidity of added shares. These results are consistent with results from conventional index addition studies. Our findings have important implications for Shariah-compliant investors, as they show that companies whose activities reflect the beliefs and ethos of their investors in the Middle East are also attractive for investment.