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The Chinese trading halt puzzle

Author

Listed:
  • Liu, Crocker H.
  • Trzcinka, Charles
  • Zhao, Ziwei

Abstract

Chinese firms have the right to initiate trading halts with 42% of halts occurring after a price increase. We examine whether managers suspend trading to increase the signal-to-noise ratio of stock prices. We show that price non-synchronicity, institutional ownership, accounting, and microstructure variables predict a trading halt and explain the positive CARs after a halt. Halts following a price rise add more value relative to a price decline. We find that halts attract mutual funds. Trading suspensions are costly; we estimate that cost of capital rises by 117 bps.

Suggested Citation

  • Liu, Crocker H. & Trzcinka, Charles & Zhao, Ziwei, 2026. "The Chinese trading halt puzzle," Journal of Financial Markets, Elsevier, vol. 77(C).
    • Handle: RePEc:eee:finmar:v:77:y:2026:i:c:s1386418125000473
    DOI: 10.1016/j.finmar.2025.101007
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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