Sharia Compliance and Stock Price Crash Risk: Evidence from Indonesia

Presenter Information

• Asty Khairi Inayah Syahwani, Institut Pertanian Bogor; Mahasiswa Program Pascasarjana Ilmu Manajemen Universitas IndonesiaFollow
• Arief Wibisono Lubis, Universitas IndonesiaFollow
• Dwi Nastiti Danarsari, Universitas IndonesiaFollow

Corresponding Author

Asty Khairi Inayah, astykh@apps.ipb.ac.id, and Sekolah Vokasi Institut Pertanian Bogor; Mahasiswa Program Pascasarjana Ilmu Manajemen Universitas Indonesia

Year

2025

Abstract

This study examines the impact of sharia compliance on stock price crash risk, controlling for company fundamental characteristics, among firms listed on the Indonesia Stock Exchange from 2021 to 2024. Panel data was analyzed using a dynamic panel model (System GMM) and crash risk is measured using NCSKEW and DUVOL. The results show that Sharia compliance significantly reduces stock price crash risk when measured using NCSKEW, while its effect on DUVOL is insignificant. This finding is consistent with the robustness check using the two-step System GMM, suggesting that Sharia principles can be a mitigating mechanism for extreme crash risk. These findings emphasize that while sharia compliance contributes, the company fundamental characteristics remain a key determinant of stock price crash risk, especially when considering the endogenous dynamics of panels through the GMM System model.

Keywords:

Crash risk; IDX, panel data, sharia Compliance, system GMM

Recommended Citation

Syahwani, Asty Khairi Inayah; Lubis, Arief Wibisono; and Danarsari, Dwi Nastiti, "Sharia Compliance and Stock Price Crash Risk: Evidence from Indonesia" (2026). International Conference on Business and Management Research (ICBMR). 24.
https://scholarhub.ui.ac.id/icbmr/2025/1/24