Market Manipulation and Innovation

46 Pages Posted: 21 Mar 2016 Last revised: 27 Nov 2019

See all articles by Douglas J. Cumming

Douglas J. Cumming

Florida Atlantic University

Shan Ji

Capital Markets CRC

Rejo Peter

York University - Schulich School of Business

Monika Tarsalewska

University of Exeter Business School

Date Written: November 26, 2019

Abstract

End-of-day stock price manipulation is generally associated with short-termism, long-term damage to equity values, and reduced incentives for employees to innovate. We use a sample of suspected stock price manipulation events based on intraday data for stocks from nine countries over eight years, and find evidence of negative effects of market manipulation on real investment decisions in innovation. We show that these negative effects are particularly harmful to innovation in markets with low intellectual property rights and high shareholder protection.

Keywords: Market Manipulation; Financial Market Misconduct; End-of-Day Dislocation, Insider Trading; Patents; Innovation; Intellectual Property Rights; Law and Finance

JEL Classification: G14; G18; O30

Suggested Citation

Cumming, Douglas J. and Ji, Shan and Peter, Rejo and Tarsalewska, Monika, Market Manipulation and Innovation (November 26, 2019). Available at SSRN: https://ssrn.com/abstract=2752236 or http://dx.doi.org/10.2139/ssrn.2752236

Douglas J. Cumming

Florida Atlantic University ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

HOME PAGE: http://booksite.elsevier.com/9780124095373/

Shan Ji

Capital Markets CRC ( email )

GPO Box 970
55 Harrington Street
Sydney, NSW 2001
Australia
+61280884237 (Phone)

Rejo Peter (Contact Author)

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

Monika Tarsalewska

University of Exeter Business School ( email )

Streatham Court, Streatham Campus,
Rennes Drive
Exeter, Devon EX4 4PU
United Kingdom

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