Is conservatism good news? The case of stocks of Jakarta Islamic index

Felizia Arni Rudiawarni; Dedhy Sulistiawan; Bruno S Sergi

doi:10.1016/j.heliyon.2022.e09292

Is conservatism good news? The case of stocks of Jakarta Islamic index

Heliyon. 2022 Apr 18;8(4):e09292. doi: 10.1016/j.heliyon.2022.e09292. eCollection 2022 Apr.

Authors

Felizia Arni Rudiawarni¹, Dedhy Sulistiawan¹, Bruno S Sergi²

Affiliations

¹ Faculty of Business and Economics, University of Surabaya, Indonesia.
² University of Messina, Italy & Harvard University, USA.

Abstract

This study examines the role of Sharia stocks to affect the association between conservatism and crash risk. Sharia stocks are represented by the Jakarta Islamic Index (JII) stocks. We use Sharia stocks as a moderating variable to provide contextual issues in discussing conservatism and crash risk. Our findings show that conservatism reduces the crash risk for Sharia stocks. The test also suggests that conservatism cannot affect crash risk for non-Sharia stocks. The examinations are also consistent with the belief that Sharia, as a set of religious norms, helps minimize future risk. This paper contributes to the literature on religion and corporate behaviors by adding a contextual factor, Sharia stocks in Indonesia.

Keywords: Conservatism; Crash risk; Indonesia; Sharia.