TY - UNPB
T1 - The real effects of market manipulation
AU - Aliyev, Nihad
AU - Allahverdiyeva, Inji
AU - Putniņš, Tālis J.
PY - 2023
Y1 - 2023
N2 - Given that corporate managers use stock prices as signals when making investment decisions, does market manipulation distort this process and impact corporate investment? We find that the increased prevalence of stock price manipulation has an economically meaningful negative effect on firms’ investment-to-price sensitivity. Furthermore, we find a stronger impact of market manipulation on investment-to-price sensitivity for stocks with greater managerial learning. Our results suggest that firm managers are less likely to use stock prices to guide their investment decisions when manipulation is more widespread, reflecting a real economic consequence of market manipulation. Consequently, stock price manipulation significantly harms the operating performance of firms.
AB - Given that corporate managers use stock prices as signals when making investment decisions, does market manipulation distort this process and impact corporate investment? We find that the increased prevalence of stock price manipulation has an economically meaningful negative effect on firms’ investment-to-price sensitivity. Furthermore, we find a stronger impact of market manipulation on investment-to-price sensitivity for stocks with greater managerial learning. Our results suggest that firm managers are less likely to use stock prices to guide their investment decisions when manipulation is more widespread, reflecting a real economic consequence of market manipulation. Consequently, stock price manipulation significantly harms the operating performance of firms.
U2 - 10.2139/ssrn.4490182
DO - 10.2139/ssrn.4490182
M3 - Preprint
T3 - SSRN
BT - The real effects of market manipulation
PB - SSRN
ER -