Firms’ Performance and Risk with the Presence of Sukuk Rating as Default Risk

This research aims to examine the role of income stream risk, stock return risk, strategic risk and default risk in explaining corporate performance. Approximately 312 listed firms, from 2008 until 2011 are chosen across industries in Malaysia to represent the sample firms. The Sukuk rating emerges as a surrogate for default risk, while the corporate performance indicators are based on the return on assets and return on equity. The contribution of the research result may lead on introducing the default risk measures by Sukuk based on the uniqueness of Malaysian data in applying the Shariah compliance.