Determinants of Corporate Leverage in Publicly Listed GCC Companies – Conventional versus Sukuk

Rwan El-Khatib, Zayed University

Document Type

Book Chapter

Source of Publication

Global Corporate Governance

Publication Date

3-30-2017

Abstract

I study the determinants of conventional leverage in a sample of publicly listed corporations based in Saudi Arabia, United Arab Emirates, and Qatar, for a period spanning from 2005 up to end of 2014, and investigate whether those determinants can also explain the utilization of Sukuk by the same corporations in their capital structures. Evidence related to the determinants of conventional leverage is consistent with results from prior studies conducted on corporations based in developed and developing countries. Firm's size, profitability, tangibility, age, and tendency to pay dividends are significant determinants of conventional leverage. However, not all those factors significantly explain the utilization of Sukuk as a financing vehicle. The size of the firm remains to be the most significant factor, in addition to the conformance of those corporations with respect to Shari'a principles measured by their utilization of other Islamic investments and financing instruments. Overall, I conclude that models used to predict conventional leverage are not capable of fully explaining the determinants of Sukuk issuances.

ISBN

978-1-78635-165-4; 978-1-78635-166-1

ISSN

1569-3732

Publisher

Emerald Publishing Limited

Volume

19

First Page

77

Last Page

102

Disciplines

Business

Keywords

Capital structure, leverage, conventional bonds, Islamic finance, Sukuk

Indexed in Scopus

no

Open Access

no

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