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Market Reactions to the Hong Kong Trading Suspensions: Mandatory versus Voluntary
Author(s) -
Wu Lifan
Publication year - 1998
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/1468-5957.00195
Subject(s) - suspension (topology) , volatility (finance) , business , devaluation , turnover , stock trading , variance (accounting) , stock exchange , stock (firearms) , issuer , monetary economics , economics , stock market , finance , exchange rate , accounting , paleontology , mathematics , management , horse , homotopy , pure mathematics , biology , mechanical engineering , engineering
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.