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Stock Market Manipulations


  • Rajesh K. Aggarwal

    (University of Minnesota)

  • Guojun Wu

    (University of Houston)


We present theory and evidence of stock price manipulation. Manipulators trade in the presence of other traders seeking information about the stock's true value. More information seekers imply greater competition for shares, making it easier for manipulators to trade and potentially worsening market efficiency. Data from SEC enforcement actions show that manipulators typically are plausibly informed parties (insiders, brokers, etc.). Manipulation increases volatility, liquidity, and returns. Prices rise throughout the manipulation period and fall postmanipulation. Prices and liquidity are higher when manipulators sell than when they buy. When manipulators sell, prices are higher when liquidity and volatility are greater.

Suggested Citation

  • Rajesh K. Aggarwal & Guojun Wu, 2006. "Stock Market Manipulations," The Journal of Business, University of Chicago Press, vol. 79(4), pages 1915-1954, July.
  • Handle: RePEc:ucp:jnlbus:v:79:y:2006:i:4:p:1915-1954

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