Empirical Evidence on the Role of Trading Suspensions in Disseminating New Information to the Capital Market
نویسندگان
چکیده
This paper examines the effect of temporarily suspending the trading of exchange-listed individual stocks. We evaluate whether regulatory authorities can successfully use the mechanism of trading suspension in forcing companies to disclose new and material information to the capital market. Previous studies on trading suspensions mainly concentrate on North-American stock markets and find no conclusive results. This study utilizes a new data set comprising of firms listed on Euronext Brussels. Our results show that suspension is indeed an effective means of disseminating new information. Stock prices adjust completely and instantaneously to the new information released during trading suspensions. We observe a significant increase in trading volume after the reinstatement of trading. On the other hand, we do not find any increase in stock return volatility around trading suspensions. Overall, our results show the efficacy of trading suspensions in disseminating new information.
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تاریخ انتشار 2002