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The Effectiveness of Trade for Trade Segment as a Surveillance Effort to Prevent Price Manipulation: Evidence from India

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Listed:
  • Kanaiyalal Shantilal Parmar
  • Chakrapani Chaturvedula

Abstract

Indian Stock Exchanges use trade for trade segment as part of surveillance activity to restrict the unwanted growth in prices to safeguard the interest of the investors. This paper studies the impact of the announcement to shift securities to trade for trade segment on stock returns and volatility of the stock returns using event study methodology. It was found that the securities have generated exorbitant positive average abnormal returns during 30 days in the pre event period, which led the exchanges to shift these stocks to trade for trade segment. The event is found to be significantly impacting average abnormal returns during 30 days in the post event period showing the negative price reaction. Also volatility of the stocks returns is found to be increasing post the announcement.

Suggested Citation

  • Kanaiyalal Shantilal Parmar & Chakrapani Chaturvedula, 2017. "The Effectiveness of Trade for Trade Segment as a Surveillance Effort to Prevent Price Manipulation: Evidence from India," Accounting and Finance Research, Sciedu Press, vol. 6(1), pages 1-9, February.
    • Handle: RePEc:jfr:afr111:v:6:y:2017:i:1:p:9
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    References listed on IDEAS

    as
    1. Allen, Franklin & Gale, Douglas, 1992. "Stock-Price Manipulation," The Review of Financial Studies, Society for Financial Studies, vol. 5(3), pages 503-529.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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