IDEAS home Printed from https://ideas.repec.org/a/eee/beexfi/v47y2025ics2214635025000711.html
   My bibliography  Save this article

The effect of stock market manipulation on investor behavioral bias

Author

Listed:
  • Liu, Jie
  • Zhang, Jingru
  • Chen, Zhenshan

Abstract

Utilizing a closing price manipulation detection model, we investigate the impact of market manipulation on investor behavioral biases. We find that the frequency of manipulation significantly increases investors' extrapolation, lottery preference, limited attention, and anchoring effect. These effects remain robust when we instrument a trading rule change as an exogenous determinant of market manipulation. Furthermore, our findings demonstrate that the increased information asymmetry on firm values and emotional fluctuations caused by market manipulation serve as potential channels to exacerbate investor behavioral biases. Additional analysis indicates that the influence of market manipulation on investor behavioral biases is more pronounced among firms with lower investor maturity, higher arbitrage costs, and in the optimism of investors.

Suggested Citation

  • Liu, Jie & Zhang, Jingru & Chen, Zhenshan, 2025. "The effect of stock market manipulation on investor behavioral bias," Journal of Behavioral and Experimental Finance, Elsevier, vol. 47(C).
    • Handle: RePEc:eee:beexfi:v:47:y:2025:i:c:s2214635025000711
    DOI: 10.1016/j.jbef.2025.101090
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S2214635025000711
    Download Restriction: no
    File URL: https://libkey.io/10.1016/j.jbef.2025.101090?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G40 - Financial Economics - - Behavioral Finance - - - General
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:beexfi:v:47:y:2025:i:c:s2214635025000711. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/journal-of-behavioral-and-experimental-finance .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.