FIN-04-022

Market Manipulation: A Comprehensive Study of Stock Pools

September 2004

Guolin Jiang, Paul G. Mahoney and Jianping Mei

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 examine abnormal turnover and returns and the relationship between them, as well as the long-term performance of the selected stocks. We conclude that the evidence suggests informed trading rather than manipulation. Our findings have implications for regulatory policy as well as the investigation and prosecution of manipulation cases.

Guolin Jiang
Institution: Shanghai University of Finance and Economics
Email: jgl@jrtan.com
Telephone: 8621-65480991


Paul G. Mahoney
Institution: University of Virginia School of Law
Email: pmahoney@virginia.edu
Telephone: (434) 924-3996


Jianping Mei
Institution: Stern School of Business, New York University
Email: jmei@stern.nyu.edu
Home Page: http://www.stern.nyu.edu/~jmei
Telephone: (212) 998-0354

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