University of Virginia Legal Working Paper Series
University of Virginia John M. Olin Program in Law and Economics Working Paper Series
Market Manipulation: A Comprehensive Study of Stock Pools
Abstract
Using a hand collected new data set, this paper examines in detail a classic account of stock market manipulationthe “stock pools” of the 1920s, which prompted the current anti-manipulation rules in the United States. We find abnormal trading volume during pools, consistent with market manipulation, but this trading led to only modest average price increases in the short run and no abnormal performance in the long run. Thus, there is no evidence that the stock pools harmed small investors. Given investigators’ efforts to find cases of manipulation on the New York Stock Exchange during the 1920s, these findings suggest that manipulation was not a substantial problem.
Subject Area
Law and Economics, Securities Law
Recommended Citation
Paul G. Mahoney, Guolin Jiang, and Jianping Mei,
"Market Manipulation: A Comprehensive Study of Stock Pools"
(October 2004).
University of Virginia Legal Working Paper Series.
University of Virginia John M. Olin Program in Law and Economics Working Paper Series.
Working Paper 8.
http://law.bepress.com/uvalwps/olin/art8
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