Costless Closing Price Manipulation

30 Pages Posted: 29 Aug 2012 Last revised: 10 Dec 2014

See all articles by Jane Chau

Jane Chau

University of Wollong - School of Accounting and Finance

Sean Foley

University of Sydney Business School

Date Written: August 27, 2012


Using 123 prosecuted cases of closing price manipulation from the Hong Kong Stock Exchange, we present the first evidence of quote-based manipulation, whereby manipulators inflate closing prices solely using quotes. Quote-based manipulation increases closing prices, bid returns, and order frequencies immediately prior to market close. In contrast to previous studies, illiquid stocks are found to be most susceptible. The manipulation appears to deceive investors, with gradual price increases observed subsequent to the manipulation, allowing manipulators to earn profits. Potential manipulations continue to be observed, suggesting illiquid stocks would benefit from a non-continuous call auction mechanism, as used in many European markets.

Keywords: manipulation, closing price, marking the close, regulation, prosecution, spoofing, painting the tape, high closing

JEL Classification: G14, G18

Suggested Citation

Chau, Jane and Foley, Sean, Costless Closing Price Manipulation (August 27, 2012). Available at SSRN: or

Jane Chau

University of Wollong - School of Accounting and Finance ( email )

Northfields Avenue
Wollongong, New South Wales 2522

Sean Foley (Contact Author)

University of Sydney Business School ( email )


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