Market Manipulation: A Comprehensive Study of Stock Pools
Shanghai University of Finance and Economics
Paul G. Mahoney
University of Virginia School of Law
New York University (NYU) - Department of Finance
Journal of Financial Economics, Forthcoming
Using a hand collected new data set, this paper examines in detail a classic account of stock market manipulation - the stock pools of the 1920s, which prompted the current anti-manipulation rules in the United States. We find abnormal trading volume during pools, consistent with market manipulation, but this trading led to only modest average price increases in the short run and no abnormal performance in the long run. Thus, there is no evidence that the stock pools harmed small investors. Given investigators' efforts to find cases of manipulation on the New York Stock Exchange during the 1920s, these findings suggest that manipulation was not a substantial problem.
Number of Pages in PDF File: 35
Keywords: Manipulation, market regulation, politics of finance
JEL Classification: G24, G28, G38, K22
Date posted: February 7, 2005
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