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Halal Stock Designation and Impact on Price and Trading Volume


  • Bacha, Obiyathulla I.
  • Abdullah, Mimi H.


This paper examines the impact of the Malaysian Syariah Advisory Council’s (SAC) decision on stock eligibility. Specifically, we address four questions related to returns and trading volume of stocks in relation to the SAC’s decision to add or delete a stock to their list of halal stocks. Overall, our findings suggest that inclusions experience a positive impact while deletions negative. Our sample of 39 inclusions showed positive MCAR and increased trading volume. The price impact however was delayed with significant positive MCARs in the 30 and 60 day window periods following announcement. The impact on trading volume appears immediate but short lived. Our Sample of 21 stocks deleted from SAC list experienced negative MCAR and reduced trading volume. These were however statistically significant only in the 60 day window post announcement.

Suggested Citation

  • Bacha, Obiyathulla I. & Abdullah, Mimi H., 2001. "Halal Stock Designation and Impact on Price and Trading Volume," MPRA Paper 12728, University Library of Munich, Germany, revised Feb 2001.
  • Handle: RePEc:pra:mprapa:12728

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    References listed on IDEAS

    1. Beneish, Messod D. & Gardner, John C., 1995. "Information Costs and Liquidity Effects from Changes in the Dow Jones Industrial Average List," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 30(01), pages 135-157, March.
    2. Harris, Lawrence E & Gurel, Eitan, 1986. " Price and Volume Effects Associated with Changes in the S&P 500 List: New Evidence for the Existence of Price Pressures," Journal of Finance, American Finance Association, vol. 41(4), pages 815-829, September.
    3. Erwin, Gayle R & Miller, James M, 1998. "The Liquidity Effects Associated with Addition of a Stock to the S&P 500 Index: Evidence from Bid/Ask Spreads," The Financial Review, Eastern Finance Association, vol. 33(1), pages 131-146, February.
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    1. repec:eco:journ1:2017-02-06 is not listed on IDEAS
    2. repec:eee:intfin:v:50:y:2017:i:c:p:119-134 is not listed on IDEAS

    More about this item


    Shariah compliance; Islamic stock designation; effect on returns and traded volume;

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other


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