• ISSN: 2301-3567
    • Frequency: Quarterly (2013-2014); Monthly (Since 2015)
    • DOI: 10.18178/JOEBM
    • Editor-in-Chief: Prof. Eunjin Hwang
    • Executive Editor: Ms Jessica C. Xiao
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JOEBM 2015 Vol.3(11): 1019-1023 ISSN: 2301-3567
DOI: 10.7763/JOEBM.2015.V3.327

The Effects of Shariah Compliance Announcement towards Stock Price Changes in Malaysia

Erimalida Yazi, Fareiny Morni, and Song Saw Imm
Abstract— 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.

Index Terms— Shariah-compliant shares, stock price, Shariah announcement, Bursa Malaysia.

E. Yazi and F. Morni are with the Faculty of Business Management, Universiti Teknologi MARA Sarawak, Kampus Samarahan, Kota Samarahan, Jalan Meranek, 94300 Sarawak, MY, Malaysia (e-mail: erimalida@sarawak.uitm.edu.my, fareiny@sarawak.uitm.edu.my).
Song S. I. is with the Faculty of Business Management, Universiti Teknologi MARA Pulau Pinang, Bandar Seri Iskandar, 31750 Tronoh Perak, MY, Malaysia (e-mail: songsi@ppinang.uitm.edu.my).

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Cite: Erimalida Yazi, Fareiny Morni, and Song Saw Imm, " The Effects of Shariah Compliance Announcement towards Stock Price Changes in Malaysia," Journal of Economics, Business and Management vol. 3, no. 11, pp. 1019-1023, 2015.

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