Stock Price Manipulation : The Role of Intermediaries
AbstractWe set out to study stock price manipulation when the manipulator is in the role of an intermediary (broker). We find that in the absence of superior information, the broker can manipulate equilibrium outcomes without losing its credibility with respect to accurate forecasting. The result extends to the case when the broker prefers more investment to come into the market. However, when moderate competition among brokers is introduced, then the investors get a favored outcome. When competition exceeds a certain threshold, neither the brokers nor the investors get their respective favored outcomes. In any case, if the broker bias for more investment dominates competition, the brokers get their favorite outcome at the expense of investors.
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Bibliographic InfoPaper provided by East Asian Bureau of Economic Research in its series Finance Working Papers with number 22280.
Date of creation: Jan 2007
Date of revision:
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More information through EDIRC
Stock Price Manipulation; Broker Manipulation; Broker Competition; Broker Bias; Emerging Markets;
Other versions of this item:
- Siddiqi, Hammad, 2007. "Stock Price Manipulation: The Role of Intermediaries," MPRA Paper 6374, University Library of Munich, Germany.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
- G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
- G20 - Financial Economics - - Financial Institutions and Services - - - General
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