Market Manipulation: A Comprehensive Study of Stock Pools

Jiang, Guolin; Mahoney, Paul G.; Mei, Jianping

doi:10.2139/ssrn.596606

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Market Manipulation: A Comprehensive Study of Stock Pools

34 Pages Posted: 28 Sep 2004

See all articles by Guolin Jiang

Guolin Jiang

Shanghai University of Finance and Economics

Jianping Mei

Cheung Kong Graduate School of Business

There are 3 versions of this paper

Date Written: September 2004

Abstract

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.

Keywords: Manipulation, market regulation, politics of finance

JEL Classification: G24, G28, G38, K22

Suggested Citation: Suggested Citation

Jiang, Guolin and Mahoney, Paul G. and Mei, Jianping, Market Manipulation: A Comprehensive Study of Stock Pools (September 2004). Available at SSRN: https://ssrn.com/abstract=596606 or http://dx.doi.org/10.2139/ssrn.596606