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Abstract

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Developing an Effective Model for Detecting Trade-based Market Manipulation
Type: Book
ISBN: 978-1-80117-397-1

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Article
Publication date: 8 May 2018

Yoke Yue Kan

The purpose of this study is to review and evaluate the salient features of stock market manipulation in Malaysia. The research questions used are: Who was involved? How…

Abstract

Purpose

The purpose of this study is to review and evaluate the salient features of stock market manipulation in Malaysia. The research questions used are: Who was involved? How it happened? What were the consequences?

Design/methodology/approach

This study has been conducted using content and thematic analysis. This study includes multiple sources of information to help establish the stylized facts and it uses cases that have been prosecuted in Malaysia for 2005-2015.

Findings

This study presents arguments and empirical data supporting the view that the stock market manipulation was conducted by those in a privileged position and with access to information. Ethical failure, involving greed, self-interest, dishonesty and a preoccupation with a quick profit, could explain why stock market manipulation happened. Manipulation harms legitimate investors, as share prices and earnings of companies are affected.

Practical implications

A better understanding about the prevalence, characteristics and consequences of the market manipulation problems will be useful for stakeholders, investors and policymakers in the financial industry for promoting and maintaining a fair, efficient and transparent stock market.

Originality/value

The originality of this paper lies in examining and presenting interpretations based on contemporary phenomenon within the real-life context of Malaysia. There is little study or literature that focuses on Malaysia, especially in examining stock market manipulation by integrating finance and management perspectives to form a comprehensive understanding of the issue.

Details

Qualitative Research in Financial Markets, vol. 10 no. 2
Type: Research Article
ISSN: 1755-4179

Keywords

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Article
Publication date: 1 January 2013

Murugesan Punniyamoorthy and Jose Joy Thoppan

This paper attempts to develop a hybrid model using advanced data mining techniques for the detection of Stock Price Manipulation. The hybrid model detailed in this…

Abstract

Purpose

This paper attempts to develop a hybrid model using advanced data mining techniques for the detection of Stock Price Manipulation. The hybrid model detailed in this article elucidates the application of a Genetic Algorithm based Artificial Neural Network to classify stocks witnessing activities that are suggestive of potential manipulation.

Design/methodology/approach

Price, volume and volatility are used as the variables for this model to capture the characteristics of stocks. An empirical analysis of this model is carried out to evaluate its ability to predict stock price manipulation in one of the largest emerging markets – India, which has a large number of securities and significant trading volumes. Further, the article compares the performance of this hybrid model with a conventional standalone model based on Quadratic Discreminant Function (QDF).

Findings

Based on the results obtained, the superiority of the hybrid model over the conventional model in its ability to predict manipulation in stock prices has been established.

Research limitations/implications

The classification by the proposed model is agnostic of the type of manipulation – action‐based, information‐based or trade‐based.

Practical implications

The market regulators can use these techniques to ensure that sufficient deterrents are in place to identify a manipulator in their market. This helps them carry out their primary function, namely, investor protection. These models will help effective monitoring for abnormal market activities and detect market manipulation.

Social implications

Implementing this model at a regulator or SRO helps in strengthening the integrity and safety of the market. This strengthens investor confidence and hence participation, as the investors are made aware that the regulators implementing market manipulation detection techniques ensure that the markets they monitor are secure and protects investor interest.

Originality/value

This is the first time a hybrid model has been used to detect market manipulation.

Details

Journal of Financial Crime, vol. 20 no. 1
Type: Research Article
ISSN: 1359-0790

Keywords

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Article
Publication date: 1 February 2001

Eva Lomnicka

This paper is intended as a brief introduction to the topic of financial market manipulation. Although market manipulation is as old as markets themselves, the subject is…

Abstract

This paper is intended as a brief introduction to the topic of financial market manipulation. Although market manipulation is as old as markets themselves, the subject is presently generating a great of interest and discussion. While initially any efforts to prevent and control market manipulation were nationally focused, the advent of global and interconnected financial markets has required a reappraisal of such parochial approaches. In addition, the task has been made all the more difficult as the opportunities for market manipulation (and for disguising it) have increased exponentially with the development of new technologies for communication and trading and of ever more ingenious and sophisticated market practices, often using novel and esoteric financial instruments.

Details

Journal of Financial Crime, vol. 8 no. 4
Type: Research Article
ISSN: 1359-0790

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Book part
Publication date: 15 November 2018

Andrew N. Kleit

Abstract

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Modern Energy Market Manipulation
Type: Book
ISBN: 978-1-78743-386-1

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Article
Publication date: 1 April 2001

Marvin G. Pickholz and Jason Pickholz

The last decade of the prior millennium witnessed many revolutionary, not evolutionary, changes in the way business is done and information is exchanged globally. The…

Abstract

The last decade of the prior millennium witnessed many revolutionary, not evolutionary, changes in the way business is done and information is exchanged globally. The Internet has changed and speeded up the ways we exchange and use information and the time necessary for doing so. This revolution has the potential to reshape the world we live in; to draw us closer together in a global community; and to allow businesses to sell products and services and to raise capital on a global basis simultaneously. Instantaneous satellite transmission of television news coverage informs us of critical events, including financial developments, in distant lands. E‐mail allows us to establish business and personal relationships and communicate ideas rapidly with foreign individuals. And we have also seen increased interest among businessmen and others in investing capital in foreign nations and in the securities of companies publicly traded in foreign or international markets. The Internet allows investors to create ‘chat rooms’ to exchange information and ideas about issuers.

Details

Journal of Financial Crime, vol. 9 no. 2
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 10 May 2021

Tooba Akram, Suresh A.L. RamaKrishnan and Muhammad Naveed

This study aims to diagnose the global key contributors in the stock market manipulation studies during the past four decades.

Abstract

Purpose

This study aims to diagnose the global key contributors in the stock market manipulation studies during the past four decades.

Design/methodology/approach

The database search is based on the terms used in the existing body of knowledge. Using the bibliometric tools and techniques on the Scopus database, the study assessed and analysed the productivity of research studies, as well as the influence of the authors, publications, journals, affiliated institutions and countries.

Findings

This paper finds the USA as the leading country investigating this area, almost capturing 40% of the research studies in finance, moreover, a huge number of co-authors. Financial crises in the late 1990s and 2008 is observed as one of the main reasons for this intriguing research. The Journal of Finance is spotted as the most persuasive journal with the highest cite score and an unprecedented number of citations. The analysis of keywords engendered that most of the stock market manipulation studies are event-based studies. Seminally unique scientometric analysis revealed that the significance of stock market manipulation was mainly captured by event-based studies, insider trading and pump and dump schemes studies. However, much remained untapped to articulate the bridging scope of technology and media with stock market behaviour and manipulations.

Research limitations/implications

The research only includes the Scopus database, however, incorporates 81% relevant study.

Practical implications

This study reckons that technology-based manipulations are emerging themes in this research field which invites the applied research to have productive outcomes.

Originality/value

The intriguing study incorporates a maximum number of the relevant literature and used a comprehensive technique for the selection of dataset in Scopus.

Details

Journal of Financial Crime, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1359-0790

Keywords

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Article
Publication date: 28 May 2020

Syed Qasim Shah, Izlin Ismail and Aidial Rizal bin Shahrin

The purpose of this study is to empirically test the role of heterogeneous investor’s, i.e. institutional investors, individuals and insiders in deteriorating market integrity.

Abstract

Purpose

The purpose of this study is to empirically test the role of heterogeneous investor’s, i.e. institutional investors, individuals and insiders in deteriorating market integrity.

Design/methodology/approach

The research is conducted by examining the participants of 244 market manipulation cases of East Asian emerging and developed financial markets for the period of 2001–2016. The empirical analysis is conducted using panel logistic regression.

Findings

The results show that firms with higher institutional ownership are most likely to be manipulated in both markets. Insiders are potential manipulators in developed markets and deteriorate market integrity. In contrast, individual investors behave differently in both markets. In developed markets, firms with high individual ownership are less likely to be manipulated while in emerging markets, firms with individual ownership are more prone to manipulation because of substantial participation by individual investors which invites manipulative practices. Additionally, the authors found that firms with a higher proportion of passive institutional investors are less likely to be manipulated in emerging markets.

Originality/value

This study contributes to the existing literature by identifying the potential manipulators in the financial markets who deteriorate market integrity with the additional focus of subdivision of institutional investors as active institutional investors and passive institutional investor. The findings are helpful for regulators in designing policies to ensure market integrity and to enforce the role of institutional investors and insiders.

Details

Journal of Financial Crime, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1359-0790

Keywords

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Article
Publication date: 17 February 2012

John F. Pinfold and Danyang He

The purpose of this paper is to investigate the July 2007 introduction of a pre‐close call auction on the New Zealand stock market and its effect on share pricing quality…

Abstract

Purpose

The purpose of this paper is to investigate the July 2007 introduction of a pre‐close call auction on the New Zealand stock market and its effect on share pricing quality and market manipulation.

Design/methodology/approach

Market quality was tested using the methodology of Pagano and Schwartz, which is based on changes in market model R2s. Closing price manipulation is detected by comparing mean bid‐ask spread characteristics of the periods before and after the introduction of the pre‐close call auction.

Findings

The closing call auction improves the quality of share pricing and reduces the incidence of market manipulation.

Practical implications

The paper confirms the effectiveness of the changes made to the method of closing the market for all firms in the market.

Originality/value

The paper extends knowledge of the effectiveness of closing call‐auctions. It is the first study in a low‐liquidity market and of shares with very low liquidities. Such markets have lower pricing quality and are more vulnerable to market manipulation. The study establishes the effectiveness of closing auctions in this environment.

Details

Journal of Financial Regulation and Compliance, vol. 20 no. 1
Type: Research Article
ISSN: 1358-1988

Keywords

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Abstract

Details

Modern Energy Market Manipulation
Type: Book
ISBN: 978-1-78743-386-1

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