As the Saudi Stock Exchange is characterised by the domination of individual investors, we aim to study the impact of religious announcements conveyed by Imams on stock prices and investment decisions. These announcements are of two types: “downgrade announcements” (re-classifying firms from Sharia-compliant firms to non-Sharia-compliant firms), and “upgrade announcements” (re-classifying firms from non-Sharia-compliant firms to Sharia-compliant firms). In order to assess to what extent the religious factor is likely to affect the willingness to hold, purchase or sell financial securities, we first address a questionnaire to 427 individual investors. This survey demonstrates a high tendency to follow Imams’ announcements. In a next step, we apply an event study methodology to Imams’ announcements, and find a symmetrical response of stock prices, with religious downgrades (upgrades) being associated with statistically significant negative (positive) abnormal returns. This reaction is in line with the signal theory and information content hypothesis, indicating that Imams’ announcements related to the “religious status of a firm” convey valuable information to the financial market.