Do hedge funds still manipulate stock prices?

Xinyu Cui and Olga Kolokolova

Journal of Corporate Finance, 2025, vol. 92, issue C

Abstract: We find no evidence of stock price manipulation by hedge funds from 2011 to 2019, despite confirming the portfolio-pumping pattern documented between 2000 and 2010. In the more recent period, the magnitude, frequency, and persistence of manipulation by hedge funds appear to have declined. This decrease is linked to reduced rewards, as fund flows no longer react positively to the end-of-quarter returns of hedge fund portfolios. Proactive regulatory actions, measured by SEC litigation cases involving hedge funds, and increased press attention to hedge fund fraud also contribute to reduced manipulation during both periods.

Keywords: Hedge funds; Stock price manipulation; Investor flow; Regulations; SEC litigations (search for similar items in EconPapers)
JEL-codes: G11 G14 G23 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:92:y:2025:i:c:s0929119925000331

DOI: 10.1016/j.jcorpfin.2025.102765

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