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Do stock swap bidders suspend their stock trading? Evidence from China

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  • Qi, Qingyu
  • Uchida, Konari
  • Liu, Jianlei

Abstract

Chinese firms can suspend trading of their stocks when they announce major events. We find that stock-swap acquirers tend to suspend stock trading after a significant stock price run-up. Suspending bidders also show significantly high announcement returns if the bidder pays with stocks, while the returns are negatively associated with the pre-suspension run-up. However, the positive return disappears in the long run. These results suggest stock-swap bidders take advantage of stock trading suspension when they identify overvaluation, providing direct evidence that stock-financed acquirers have an incentive to manage stock prices. The results are robust to firms' corporate governance structures.

Suggested Citation

  • Qi, Qingyu & Uchida, Konari & Liu, Jianlei, 2024. "Do stock swap bidders suspend their stock trading? Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 85(C).
    • Handle: RePEc:eee:pacfin:v:85:y:2024:i:c:s0927538x24000829
    DOI: 10.1016/j.pacfin.2024.102331
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