Stock Market Crashes and the Performance of Circuit Breakers: Empirical Evidence

BENI LAUTERBACH, URI BEN‐ZION

Research output: Contribution to journalArticlepeer-review

58 Scopus citations

Abstract

This study examines the behavior of a small stock market with circuit breakers and with a one‐hour preauction order imbalance disclosure, during the October 1987 crash. The crash and its aftershocks lasted for a week and selling pressure was concentrated in higher beta, larger capitalization, and lower leverage firm stocks. Circuit breakers when implemented reduced the next‐day opening order imbalance and the initial price loss; however, they had no effect on the long‐run response. Some price overreaction and reversal phenomena also are documented. 1993 The American Finance Association

Original languageEnglish
Pages (from-to)1909-1925
Number of pages17
JournalJournal of Finance
Volume48
Issue number5
DOIs
StatePublished - 1 Jan 1993

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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