Voluntary Trading Suspensions and Media Coverage on the LSE

Abstract

The study examines voluntary suspensions and subsequent relistings on the London Stock Exchange. The results show that voluntary suspensions produce an abnormal return series very similar in pattern to the exchange-initiated suspensions observed elsewhere. The paper then examines the role of media coverage on price movements around the suspension. In the pre-suspension period the quantity of news is positively associated with abnormal returns. Subsequent to relisting, the impact of media coverage switches from a quantitative role to a more qualitative informative role. Other evidence shows that firms associated with takeover activity have lower volatility of returns around the suspension consistent with a convergence of beliefs, that the length of the suspension period is not significant, and media coverage does not increase the heterogeneity of investor beliefs. Overall the results suggest incremental media information may have a significant accociation with price movements.