Studies and Research

​​​​​​​​​The Impact of Shari'a Compliance Advices (SCAs) on the Saudi Capital Market: Evidence from the IPO Market     

December, 2018                                                                                  

shutterstock_6666.jpgThis report documents the finding of investigation on how investors in Saudi Arabia react to Shari'a scholars' advices, about the compliance of an investment to Islamic teachings they adhere to. The setting of Saudi Arabia initial public offerings (IPOs) market enables to map the decisions of individuals to subscribe into as IPO with the Shari'a compliance advices, Shari'a scholars announced about that particular IPO.

The number of individuals subscribing to an IPO is expected to drop by 80% if Shari'a scholars agree all to reject the IPO firm A  Shari'a compliant firm in their compliance advices announced during the IPO subscription period. Moreover, if Shari'a scholars disagree about the Shari'a compliance status of a firm, individuals tend to react to the scholars who approved the IPO as a Shari'a compliant investment while show no significant reaction to the advice of the ones who rejected it.

​​​​​​​​​The Impact of Shari'a Compliance Advices (SCAs) on the Saudi Capital Market: Evidence from the IPO Market


 

The Information Content of Earnings Announcements : Evidence from the Saudi Market 

JAN 2019

Do earnings announcements convey useful information to investors in the marketplace? Our results reveal that the market reaction to the information content of earnings announcement, measured by abnormal trading volume, has been increasing over the years. The results provide supportive evidence that regulatory applications have played an important role to enhance the efficiency of announcements released by companies in the marketplace. Additionally, our findings suggest that the leakage of information and the level of insider trading have relatively decreased due to the Capital Market Authority's efforts in improving the information                                                         environment. ​

 The Information Content of Earnings Announcements : Evidence from the Saudi Market ​


 

An Empirical Investigation of the Post-IPO Operating Performance in the Saudi Stock Market

May 2018

Consistent with the empirical findings in the literature in developed and emerging markets, our analysis suggests that the operating performance, measured by return on assets (ROA) and return on equity (ROE), deteriorates in post-IPO period. The analysis has been conducted on the firm level, industry level, across time, based on the use of the IPO proceedings, and government holdings before and after the IPO. The main result of the analysis still holds in all specifications. Data Envelopment Analysis (DEA) technique has also been implemented to investigate the question in hand. DEA allows us to examine the difference between the pre-and the post-IPO operating performance based on several inputs and outputs. The empirical results are similar to the analysis of means. Most companies show a decline in their performance relative to their pre-IPO performance. 
This is the final report of the project “An Empirical Investigation of the Post-IPO Operating Performance in the Saudi Stock Market”. This report summarizes the two previous reports and adds further analysis to the post-IPO operating performance across sectors, time, government ownership, and the IPO proceedings. Also, this report discusses the challenges and the opportunities encountered by the team throughout the project stages. Finally, the report concludes and gives recommendations that arise from the analysis and the investigation process.​

   An Empirical Investigation of the Post-IPO Operating Performance in the Saudi Stock Market​


 

Mutual Funds Performance in Saudi Arabia

This study offers a consideration of the performance of locally focused equity mutual funds in Saudi Arabia, specifically in comparison to the performance of their benchmarks in the Saudi Arabian context. The purpose is to present an in-depth analysis of the performance of Saudi equity mutual funds. The central research question is: Do locally focused equity mutual funds outperform the Saudi market?​

 Mutual Funds Performance in Saudi Arabia


 

 

 

The CMA and the Saudi Stock Market Crash of 2006 (summary)

By the end of 2006, the stock market’s main index (TASI) had lost approximately 65% of its value, and market capitalization had fallen by half. Also the global financial crisis of 2008 had caused the stock market to plummet even more than it had in 2006, two lessons from this experience should be learned.

  • First, what could it have done to prevent the crash at the time?
  • Second, what could it do now to prevent future catastrophes?

 The CMA and the Saudi Stock Market Crash of 2006