How does an online influencer manipulate the stock market?

Zhigang Zhang, Qiang Zhang, Shancun Liu and Jiarui Wang

Finance Research Letters, 2023, vol. 58, issue PA

Abstract: We construct a two-period Kyle model to investigate how a financial online influencer manipulates the stock market. Given that an online influencer usually has many loyal fans, he first places a random order in the market and transmits its signal to his fans, and then engages in predatory trading in the second period. We provide a sufficient condition for the motivation of the influencer manipulating the market. With the increase in the number and the level of fans' loyalty, the market liquidity is improved while the influencer enhances the intensity of predatory trading resulting in worse deteriorated price informativeness.

Keywords: Online influencer; Predatory trading; Market quality; Price informativeness (search for similar items in EconPapers)
JEL-codes: D80 G4 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:58:y:2023:i:pa:s1544612323007031

DOI: 10.1016/j.frl.2023.104331

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