Abstract
PurposeThe present study aims to examine the effects of the Islamic sacred months, namely, Muḥarram, Rajab, Dhu al-Qaʿdah and Dhu al-Ḥijjah, on stock prices on the Iran and Iraq Stock Exchanges.Design/methodology/approachUsing the infrastructure models of the capital market, the daily stock prices were calculated for the sacred and non-sacred months. As the data of this study are non-stationary, the AMIRA time-series model was used for better understanding of the model or future projections. The dependent variables of this study are the daily stock indexes for Iranian and Iraqi Stock Exchanges, and independent ones are the sacred and non-sacred months of a lunar year. Data were gathered daily from the financial statements of Iranian and Iraqi Stock Exchanges websites. To test the hypotheses under study, a five-year period from 2012 to 2016 was considered for both Iraqi and Iranian Stock Exchanges, which corresponds with the lunar calendar from 1433-1437AH.FindingsThe obtained results indicated that there is no significant difference in stock prices between the sacred months of Muḥarram, Rajab, Dhu al-Qaʿdah and Dhu al-Ḥijjah and other non-sacred months. However, the stock price in the Iranian Stock Exchange has a significant difference in Rajab and Dhu al-Qaʿdah with other non-sacred months.Originality/valueThe results of this study will reveal more than ever the role of Islamic sacred months for society and users of financial statements to make better financial decisions especially in Islamic emerging markets.
Highlights
An efficient capital market is one in which the stock price reflects all available information and where investors logically respond to new information (Hashemi et al, 2014)
The aim of the present study is to discover the relationship between the sacred months of a year and stock indexes in the Iranian and Iraqi Stock Exchanges
The research hypotheses indicated that the stock index in MuhÁ arram, Rajab, Dhu al
Summary
An efficient capital market is one in which the stock price reflects all available information and where investors logically respond to new information (Hashemi et al, 2014). Many scholars believe that information which reaches the market gradually or with delay would affect the stock price (Foroghi and Dastjouri, 2015). As soon as the market becomes detached from its efficient status, the process of revision and adjustment in the stock price goes through a time lag and the market responds slowly to new information (Fadaei Nejad and Kamelnia, 2013). Published in the ISRA International Journal of Islamic Finance. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode
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