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Do hedge funds still manipulate stock prices?

Author

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  • Cui, Xinyu
  • Kolokolova, Olga

Abstract

We find no evidence of stock price manipulation by hedge funds from 2011 to 2019, despite confirming the portfolio-pumping pattern documented between 2000 and 2010. In the more recent period, the magnitude, frequency, and persistence of manipulation by hedge funds appear to have declined. This decrease is linked to reduced rewards, as fund flows no longer react positively to the end-of-quarter returns of hedge fund portfolios. Proactive regulatory actions, measured by SEC litigation cases involving hedge funds, and increased press attention to hedge fund fraud also contribute to reduced manipulation during both periods.

Suggested Citation

  • Cui, Xinyu & Kolokolova, Olga, 2025. "Do hedge funds still manipulate stock prices?," Journal of Corporate Finance, Elsevier, vol. 92(C).
    • Handle: RePEc:eee:corfin:v:92:y:2025:i:c:s0929119925000331
    DOI: 10.1016/j.jcorpfin.2025.102765
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    More about this item

    Keywords

    Hedge funds; Stock price manipulation; Investor flow; Regulations; SEC litigations;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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