We investigate whether the religious announcements conveyed by the Imams (Islamic scholars), regarding the upgrade classifications from non-Sharia compliant firms to Sharia-compliant firms and the downgrade classifications from Sharia-compliant firms to non-Sharia compliant firms have an impact on stock prices and the investments’ decisions of the market participants in the Saudi stock market (Tadawul). Firstly, we run a questionnaire to discover the possible impact of Imams’ announcements and religious instructions over individual investors’ decisions. We find a high tendency to follow the religious instructions and Imams’ announcements concerning the religious status of the listed companies. Moreover, we find that the religious factor is likely to affect the desire to retain financial securities according to their religious status. Secondly, we apply the event study methodology over the upgrade announcements (re-classifying firms from non-Sharia compliant firms to Sharia-compliant firms) and downgrades announcements (re-classifying firms from Sharia-compliant firms to non-Sharia compliant firms) announced by the authorised Imams, to capture the stock reactions, if any. We find a symmetrical response in stock prices that downgrades are significantly associated with negative stock reaction, and upgrades are significantly associated with positive stock reactions. However, the upgrades’ reactions are weaker in a level of magnitude and significance than the downgrades’ reaction. This reaction is in line with the signal theory and the information content hypothesis, indicating that Imams’ announcements, concerning the religious status of a firm, convey valuable information to the stock market.