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Market Reactions to the Hong Kong Trading Suspensions: Mandatory versus Voluntary

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  • Lifan Wu

    (Department of Economics and Finance, City University of Hong Kong, Tat Chee Avenue, Kowloon, Hong Kong)

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    Abstract

    This paper investigates the market reactions to regulator-initiated (mandatory) suspension and issuer-initiated (voluntary) suspension on the Stock Exchange of Hong Kong. It is found that there is substantial devaluation of the stocks during either suspension, and both the variance and trading volume are higher in the post-suspension period than in the pre-suspension period. However, the changes in value and variance are sensitive to the reason for the suspension. The evidence shows that mandatory suspensions are more effective than voluntary suspensions in disseminating information, although both suspensions may not effectively ease unusual volatility immediately. Copyright Blackwell Publishers Ltd 1998.

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    Bibliographic Info

    Article provided by Wiley Blackwell in its journal Journal of Business Finance & Accounting.

    Volume (Year): 25 (1998-04)
    Issue (Month): 3&4 ()
    Pages: 419-437

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    Handle: RePEc:bla:jbfnac:v:25:y:1998-04:i:3&4:p:419-437

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    Web page: http://www.blackwellpublishing.com/journal.asp?ref=0306-686X

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    Web: http://www.blackwellpublishing.com/subs.asp?ref=0306-686X

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    Cited by:
    1. Peter-Jan Engelen & Rezaul Kabir, 2006. "Empirical Evidence on the Role of Trading Suspensions in Disseminating New Information to the Capital Market," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 33(7-8), pages 1142-1167.

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