Governance, Sukuk and Bond Performance: A Systematic Literature Review

Bonds and sukuk have become increasingly popular as financing mechanisms for countries and organizations. However, there are mixed findings regarding the relationship between governance and sukuk/bond. It is important to understand how governance can affect sukuk and bond and provide suggestions for decision makers for financing method. This study aims to review the literature related to governance and performance of bond and sukuk (issuance and yield). The review complied with the Reporting Standards for Systematic Synthesis of Evidence (ROSES). Keywords related to sukuk, bonds, performance, and issuance were used to gather articles from Web of Science (WoS) and Scopus. After a rigorous selection and filtering process, a total of 30 articles were included in this review. The main findings show the influence of governance mix on sukuk/bond performance. There has been a marked increase in articles, particularly those focusing on listed companies. Agency theory dominates the literature, and the Ordinary Least Square (OLS) method is often used as an analytical tool. It has been noted that studies that include different types of governance, such as institutional and corporate governance in one framework, are limited. Thematic analysis revealed seven main themes with 27 sub-themes. The main themes include institutional governance, corporate governance, shariah governance, bank/firm specific, industry specific, country specific, and others. Institutional and shariah governance are the least examined while corporate governance received most of the attention. The results suggest mixed results regarding the impact of firm-specific, industry-specific and country-specific variables on sukuk/bond performance. More empirical studies of Shariah and institutional governance are needed in different location and using different population such as banks, financial, and non-financial organizations. A comparison between the three layers of governance and their effects on sukuk and bond performance can be a fruitful direction of future work.