Common institutional ownership and abnormal stock trading halts

Zhibo Xu, Siyu Yan and Zhongxin Gan

Finance Research Letters, 2025, vol. 76, issue C

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.

Keywords: Common institutional ownership; Externalities; Abnormal stock trading halts (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:76:y:2025:i:c:s1544612325001631

DOI: 10.1016/j.frl.2025.106899

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