Evaluating the Peformance of Symmetric Price Limits: Evidence from the Egyptian Stock Exchange

This nonparametric event study questions the current symmetric price limit mechanism imposed on the Egyptian Stock Exchange. Price limits are usually instituted to control the volatility of daily stock price movements through establishing price constraints and providing time for rational reassessment of investment decisions during times of panic trading. This study asserts that such limits prove the opposite and can have three delirious consequences: (1) they can be the source of higher volatility on subsequent trading days, (2) they can delay full incorporation of information into prices, or they can (3) interfere with trading activities of investors.