Abstract
Although many papers have examined the Saudi stock market, to date none have explored the influence of religiosity on the behavior of stock prices, taking into account the dominance of individual investors. These characteristics distinguish the Saudi stock market from other mature and immature markets. Therefore, we study the reaction of the Saudi stock market to announcements by imams regarding firms' sharia compliance, using a two-step procedure. First, we distribute a questionnaire to gauge individual opinions about imams' announcements. Then, we conduct an appropriate event-study to capture the potential abnormal returns. Our findings indicate that imams’ announcements convey valuable information to the stock market.
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