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

Qingyu Qi, Konari Uchida and Jianlei Liu

Pacific-Basin Finance Journal, 2024, vol. 85, issue C

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.

Keywords: Stock-swap acquisition; Stock trading suspension; Market timing; Stock price keeping; China (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:85:y:2024:i:c:s0927538x24000829

DOI: 10.1016/j.pacfin.2024.102331

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