Stock Price Manipulation: The Role of Intermediaries

Hammad Siddiqi ()

Finance Working Papers from East Asian Bureau of Economic Research

Abstract: We set out to study stock price manipulation when the manipulator is in the role of an intermediary (broker). We find that in the absence of superior information, the broker can manipulate equilibrium outcomes without losing its credibility with respect to accurate forecasting. The result extends to the case when the broker prefers more investment to come into the market. However, when moderate competition among brokers is introduced, then the investors get a favored outcome. When competition exceeds a certain threshold, neither the brokers nor the investors get their respective favored outcomes. In any case, if the broker bias for more investment dominates competition, the brokers get their favorite outcome at the expense of investors.

Keywords: Stock Price Manipulation; Broker Manipulation; Broker Competition; Broker Bias; Emerging Markets (search for similar items in EconPapers)
JEL-codes: C72 D80 G10 G20 (search for similar items in EconPapers)
Date: 2007-01
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Citations: View citations in EconPapers (2)

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Working Paper: Stock Price Manipulation: The Role of Intermediaries (2007)
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