This paper seeks to investigate whether the announcement would affect the investors or funds managers' decision to buy, keep or sell stocks that are Shariah-compliant or non-Shariah compliant. The sample is based on the listed Shariah-compliant stocks (SCS) on 29 November 2013 which uses a revised methodology in screening stocks for Shariah-compliance. This has resulted a dramatic change to the number of Shariah compliant firms in Bursa Malaysia and for the first time it has caused a drastic removal of 158 previously Shariah compliant stocks from SAC's Shariah compliant list. Considering the revised screening methodology of the SC, this paper provides clear evidence that the inclusion of a stock in the Shariah-compliant list has a positive effect to the value of the stock while removal from the list negatively affects the price of the stock.

No abstract