This paper studies the trading behavior of investors facing a large number of firm-initiated stock trading suspension events during the Chinese stock market crisis in July of 2015. Using account-level trading data from the Shanghai Stock Exchange, we find that investors with a higher fraction of holding value in suspension sell less (or purchase more) of non-suspended stocks. Consequently, non-suspended stocks whose shareholders having high average account- level suspension fraction experience a relative price appreciation, which subsequently reverses. These evidences indicate that trading suspension can calm down investors and therefore helps to stabilize the volatile market in crisis time.
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