Market Manipulation and Innovation
46 Pages Posted: 21 Mar 2016 Last revised: 27 Nov 2019
Date Written: November 26, 2019
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: Suggested Citation