{"title":"Common institutional ownership and abnormal stock trading halts","authors":"Zhibo Xu , Siyu Yan , Zhongxin Gan","doi":"10.1016/j.frl.2025.106899","DOIUrl":null,"url":null,"abstract":"<div><div>Using data from Chinese listed firms over 2007–2023, we identify a new economic benefit of common institutional ownership: reduced abnormal trading halts. Results remain robust across various checks. Mechanism analysis reveals that the information advantage and the internalization of governance externalities by common institutional ownership are key drivers of this effect. We also provide evidence that common institutional ownership can impose ex-ante restrictions and employ ex-post “exit threats” to discipline insiders, thereby reducing abnormal trading halts. Overall, our results indicate that common institutional ownership curbs abnormal trading halts, offering an alternative perspective in the policy debate on its anti-competitive effects.</div></div>","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"76 ","pages":"Article 106899"},"PeriodicalIF":7.4000,"publicationDate":"2025-02-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Finance Research Letters","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S1544612325001631","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
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Abstract
Using data from Chinese listed firms over 2007–2023, we identify a new economic benefit of common institutional ownership: reduced abnormal trading halts. Results remain robust across various checks. Mechanism analysis reveals that the information advantage and the internalization of governance externalities by common institutional ownership are key drivers of this effect. We also provide evidence that common institutional ownership can impose ex-ante restrictions and employ ex-post “exit threats” to discipline insiders, thereby reducing abnormal trading halts. Overall, our results indicate that common institutional ownership curbs abnormal trading halts, offering an alternative perspective in the policy debate on its anti-competitive effects.
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