Stock Market Manipulation and Corporate Venture Capital Investments

59 Pages Posted: 14 May 2023 Last revised: 13 Nov 2023

See all articles by Douglas J. Cumming

Douglas J. Cumming

Florida Atlantic University; European Corporate Governance Institute (ECGI)

Yuan Li

Florida Atlantic University

Yimeng Yu

Hangzhou Data Far East Technology Pty Ltd

Date Written: April 27, 2023

Abstract

We investigate the relationship between corporate venture capital (CVC) and market manipulation for NASDAQ and NYSE listed companies. The data indicate stock market manipulation significantly drops on average over a two-year period prior to a company forming a CVC. CVC investments in entrepreneurial firms are followed by a rise in market manipulation in the ensuing year, but a decline thereafter. Stock manipulation harms the ability of CVCs to form investment syndicates and reduces the likelihood of successful IPO and acquisition exits. The hazard rate for a CVC-backed entrepreneurial firm is 0.5 for an IPO exit when the CVC faces market manipulation.

Keywords: Market microstructure, Market manipulation, Venture capital, Syndication, Exit

JEL Classification: G14, G24

Suggested Citation

Cumming, Douglas J. and Li, Yuan and Yu, Yimeng, Stock Market Manipulation and Corporate Venture Capital Investments (April 27, 2023). Available at SSRN: https://ssrn.com/abstract=4427743 or http://dx.doi.org/10.2139/ssrn.4427743

Douglas J. Cumming (Contact Author)

Florida Atlantic University ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

HOME PAGE: http://sites.google.com/view/douglascumming/bio?authuser=0

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://https://ecgi.global/users/douglas-cumming

Yuan Li

Florida Atlantic University ( email )

Boca Raton, FL 33431
United States

Yimeng Yu

Hangzhou Data Far East Technology Pty Ltd

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