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Firm-initiated stock trading suspension during a market crash

Author

Listed:
  • Huang, Jennifer
  • Shi, Donghui
  • Song, Zhongzhi
  • Zhao, Bin

Abstract

We investigate the determinants and effects of firm-initiated trading suspension during the Chinese stock market crash in July 2015. Our findings reveal that firms implemented suspensions to prevent investors’ panic selling, mitigate negative economic feedback, and safeguard specific shareholders’ interests. Once trading resumes, suspended stocks quickly align with the returns of comparable stocks, indicating that investors do not appear to penalize these firms in terms of valuation. Regarding post-resumption trading profits, small individual investors and institutions experience losses, whereas large individual investors and state agencies realize gains.

Suggested Citation

  • Huang, Jennifer & Shi, Donghui & Song, Zhongzhi & Zhao, Bin, 2025. "Firm-initiated stock trading suspension during a market crash," Journal of Banking & Finance, Elsevier, vol. 177(C).
    • Handle: RePEc:eee:jbfina:v:177:y:2025:i:c:s0378426625000937
    DOI: 10.1016/j.jbankfin.2025.107473
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    More about this item

    Keywords

    Stock trading suspension; Market crash; Event study;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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