Abstract—The aim of the paper is to examine whether different announcement of the sukuk sectoral issuance carry any new information to market for the period 2004-2011 in Malaysia. Data are collected from the Securities Commission Malaysia (SC) and Bloomberg databases. The study employs event study methodology using cumulative average abnormal return (CAAR) on symmetric and asymmetric events based on the reaction of the FTSE Kuala Lumpur Composite Index (FTSE KLCI) to the announcement of sukuk issuance. The three sectors are; construction, services and industrial products. The findings indicate that the best sector is the services sector. This study would be useful to issuers, investors and decision- makers in assessing the credit risk of sukuk issuance. Keywords— Sukuk, Islamic finance, event study, CAAR I. INTRODUCTION ALAYSIA was the largest market for sukuk raising USD5.5billion from 54 issues in 2008 [1]. During the 2008 financial crisis, the global amount of sukuk issuance decreased sharply by 54.5 percent to reach USD15.1 billion, as compared to USD33.1 billion in 2007. The decline in sukuk issuance was due to the credit crunch that forced investors to step aside from the money markets, hence exhausting resources for sukuk as well. The number of global sukuk issuance had weakened in the first half of 2008 and remained lower than the 2007 record. Despite the decline, the prospects for the sukuk market were still positive because of the existing demand. Besides, sukuk has a specific form in the structure of Islamic finance. Firstly, sukuk embarked as a benchmark for bond in the conventional system where the bond market increased rapidly in the last several years. The appearance of sukuk in Islamic finance can attract the economic world. Second, sukuk rose significantly, when the condition of financial industries was in a serious crisis and the debt (interest base) was recognized as the main factor causing the financial crisis. Therefore, sukuk as an alternative to conventional bonds can help in stabilizing financial markets [2]. Nursilah Ahmad (Ph.D) is a Senior Lecturer and Research Fellow, Islamic Finance and Wealth Management Institute (IFWMI), Universiti Sains Islam Malaysia. This research is funded by FRGS Research Grant: FRGS/1/2013/SS07/USIM/02/1. Email: nursilah@usim.edu.my Syazwani Abd Rahim is a Postgraduate Student (Ph.D), Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia. Email: syazwani89ani@yahoo.com. Thus, this paper examines whether different sectors of sukuk issuers' announcements contain pricing relevant information for sukuk. This is motivated by three key factors affecting the sukuk market. First, the industry regained market confidence after the restructuring of the higher profile sukuk default in Dubai after the 2008 financial crisis. Second, investors are avoiding the riskiest markets of the United States and Europe. Third, positive economic growth and favorable debt dynamics in the two most important sukuk issuing regions of the Gulf and Malaysia has attracted investors to the Islamic capital market. Most previous studies focused on the price impact of rating changes, upgrades and downgrades, but the present study considers the possibility of asymmetric reactions of the market after announcements of sukuk issuances by different sectors. The paper contributes to the literature since the empirical work on sukuk issues by sectors is relatively few. The remainder of the paper is organized as follows. Section II discusses the related literature and provides a brief background on recent development of sukuk in Malaysia. Section III discusses the theoretical framework. Section IV highlights the research method. Section V discusses the findings and the final section concludes the paper. II. LITERATURE REVIEW A. Definition of Sukuk According to the Accounting and Auditing Organization for Islamic Institution (AAIOFI), sukuk is defined as ―certificates of equal value that represent an undivided interest in the ownership of an underlying asset (both tangible and intangible), usufruct, services or investments in particular projects or special investment activities‖ [3]. The Securities Commission Malaysia [4] defines sukuk as ―a financial document or certificate which represents the value of an asset evidencing an undivided pro rata ownership of an underlying asset”. B. Sukuk Development in Malaysia The sukuk market has become an increasingly important component of the development of the global sukuk market [5]. Recently, there has been an increase in the issuance of Islamic capital market securities (sukuk) by corporate and public sector entities amidst growing demand for alternative investments [6]. Although the size of the market is modestly by global standards, the sukuk market is experiencing remarkable growth, increasing at an average rate of growth of 40 percent per annum [7]. The sukuk market is the fastest growing and a promising segment of Islamic finance. Indeed, the issuance of Sukuk is CAAR Estimations by Sectors of Sukuk Issuance Nursilah Ahmad, and Syazwani Abd Rahim M International Conference on Economics, Education and Humanities (ICEEH'14) Dec. 10-11, 2014 Bali (Indonesia) http://dx.doi.org/10.15242/ICEHM.ED1214166 276