Stock Price Manipulation: The Role of Intermediaries
AbstractWe model 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 credibility with respect to accurate forecasting. This result extends to the case when the broker prefers more investment to come into the market. However, when competition among brokers is introduced then the investors get their favorite outcome in the absence of superior information. This result has important implications for encouraging broker competitions in developing markets. Many developing markets are still not demutualized; hence broker level competition is limited in such markets.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 6374.
Date of creation: Dec 2007
Date of revision:
Stock Price Manipulation; Broker Manipulation; Broker Competition; Broker Bias; Emerging Markets; Market Microstructure;
Other versions of this item:
- Hammad Siddiqi, 2007. "Stock Price Manipulation : The Role of Intermediaries," Finance Working Papers 22280, East Asian Bureau of Economic Research.
- G1 - Financial Economics - - General Financial Markets
- G2 - Financial Economics - - Financial Institutions and Services
- G3 - Financial Economics - - Corporate Finance and Governance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-01-05 (All new papers)
- NEP-MIC-2008-01-05 (Microeconomics)
- NEP-MST-2008-01-05 (Market Microstructure)
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