Price limit relaxation and stock price crash risk: Evidence from China

Shaoqing Jia, Yunbi An, Liuyong Yang and Fangzhao Zhou

Finance Research Letters, 2024, vol. 59, issue C

Abstract: This paper investigates the impact of price limit relaxation on stock price crash risk, based on the change in the daily price limit in the ChiNext market in August 2020. We find that the widening of price limits significantly reduces stock price crash risk. This result is robust to parallel trend and placebo tests. Furthermore, we show that widening price limits can help lower information asymmetry between informed and uninformed traders, thereby decreasing bad news hoarding and reducing stock price crash risk.

Keywords: Price limits; Stock price crash risk; Information asymmetry; Stock market stability (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1544612323010875
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:59:y:2024:i:c:s1544612323010875

DOI: 10.1016/j.frl.2023.104715

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().