Predation by stock price manipulation

Rafael Matta, Sergio H. Rocha and Paulo Vaz

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

Abstract: We develop a model in which feedback effects from equity markets allow uninformed traders to profit by short selling a firm’s stock while going long on its product market competitor. As this strategy distorts the investment of the firm targeted by short selling to the benefit of its rival, we label it predation by stock price manipulation. A short selling ban does not prevent manipulation since the speculator can still induce a firm to underinvest by establishing a long position in its rival. Our analysis unveils how competitive interactions among firms expand the scope of manipulation, providing new insights into equity markets and short sales regulation.

Keywords: Stock price manipulation; Predation; Product market competition; Feedback effect (search for similar items in EconPapers)
JEL-codes: D43 D82 D84 G14 G31 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0929119925000380
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:92:y:2025:i:c:s0929119925000380

DOI: 10.1016/j.jcorpfin.2025.102770

Access Statistics for this article

Journal of Corporate Finance is currently edited by A. Poulsen and J. Netter

More articles in Journal of Corporate Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().