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Praise for Regulating Competition in Stock Markets
"A fascinating, wide-ranging analysis beginning with the adverse effects of the financial crisis on happiness, health, and suicide, then analyzing the manipulation of finance markets that presumably contributed to the crisis, and ending with regulatory cures."—Richard B. Freeman, PhD, Herbert S. Ascherman Professor of Economics, Harvard University, Fellow of the American Academy of Arts and Sciences, member of two panels of the National Academy of Sciences
"This timely book examines the causes and consequences of stock market manipulation around the world. Given the importance of investor protection and crisis prevention, the authors' insightful work is an essential read for academics, practitioners, and policymakers alike."—Douglas Cumming, JD, PhD, CFA, Professor of Finance and Entrepreneurship and Ontario Research Chair in Economics and Cross Cultural Studies, Schulich School of Business, York University
"This intriguing book makes the case that stock market manipulation, far from being a lurid practice of the past, might still be an important concern in modern economies. Academics and policymakers will benefit from studying its immense wealth of data and its proposals."—Xavier Gabaix, PhD, Martin J. Gruber Professor of Finance, Stern School of Business, New York University
"In economics, measures of happiness are increasingly used to evaluate well-being. This is quite a novel and welcome addition to this literature."—Richard A. Easterlin, PhD, University Professor and Professor of Economics,University of Southern California, member of the National Academy of Sciences and the American Academy of Arts and Sciences
"A substantive, authoritative, and insightful work on securities regulation, relevant to both scholars and practitioners."—Richard J. Joseph, MLitt, JD, Vice President of Academic Affairs, Hult International Business School
Introduction
Acknowledgments
Chapter 1: Does the Recent Financial Crisis Impact Health and Happiness? (Xin Yan, Lawrence R. Klein, Viktoria Dalko, Ferenc Gyurcsány, Michael H. Wang and Christine Huang)
Concepts of Happiness
The History of Modeling Health and Financial Crisis
Our Three Objectives
Our Financial Crisis Impact Model
Results
Financial Crisis as a Major International Traumatic Event
Can We Just Wait for the Next Financial Crisis?
Notes
Chapter 2: Profound Unhappiness in the International Recession
The Case of Suicide in Industrialized Countries (M. Harvey Brenner)
Background
Two Concepts of Happiness
A Psychological Viewpoint
Unhappiness, Hopelessness and Depression
Hypothesis: Happiness as Accomplishment Predicts Happiness as Pleasure
Analysis
Conclusions
Chapter 3: Preventing Stock Market Crises (I)
Regulating Share Holding Concentration (Xin Yan, Lawrence R. Klein, Viktoria Dalko, Ferenc Gyurcsány and Michael H. Wang)
Is Perfect Competition Possible in the Stock Market?
Concentration, Manipulation, and Monopoly
Can Stock Markets Still be Manipulated?
Theoretical Literature on Market Manipulation
We choose the Accumulation-Lift-Distribution (A-L-D) scheme to study
Manipulative Objective of Each Stage of the A-L-D Scheme
Are Monopolistic Practices Involved in the A-L-D Scheme?
Antitrust Against A-L-D Manipulation
Existing Approach and our Proposal to Regulate Market Manipulation
Regulatory Proposal: A Generic Recommendation
Benefits of Regulating Concentration
Concluding Remarks and Future Research
Notes
Chapter 4: Preventing Stock Market Crises (II)
Regulating Trade-based Price-lifting (Xin Yan, Lawrence R. Klein, Viktoria Dalko, Ferenc Gyurcsány and Michael H. Wang)
How is Large Price Impact by other Investors Induced?
Empirical Research on Volume-based Price Impact
The SEBI Prosecution Cases
The Manipulation Tactics Used in Price-lifting
Anatomy of an Investor's Trades in a Stock During a Trading Day
Unified Approach to Surveillance and Regulatory Measures
Selling Speed in Distribution and Short-selling
Concluding Remarks
Notes
Chapter 5: Preventing Stock Market Crises (III)
Regulating Earnings Manipulation (Xin Yan, Lawrence R. Klein, Viktoria Dalko, Ferenc Gyurcsány and Michael H. Wang)
How Important is Earnings Information to Investors?
Earnings Manipulation is Problematic
How is Earnings Manipulation Done in Reality?
Earnings Manipulation is Pervasive
Earnings Manipulation is Persistent
Auditors Frequently Fail to Stop Earnings Manipulation
Proposals to Effectively Regulate Earnings Manipulation
Concluding Remarks
Notes
Chapter 6: Preventing Stock Market Crises (IV)
Regulating Trading by Corporate Insiders (Xin Yan, Lawrence R. Klein, Viktoria Dalko, Ferenc Gyurcsány and Michael H. Wang)
What is the Purpose of Trading by Corporate Insiders?
The Relationship Between Earnings Manipulation and Trading by Corporate Insiders
Trading by Corporate Insiders is an Important Drive for Earnings Manipulation
Insider Trading with Earnings Manipulation is not Effectively Regulated
Information Monopoly and Information Asymmetry
Proposals to Regulate Effectively Trading by Corporate Insiders
Discussion of the Four Proposed Measures
Conclusion
Notes
Chapter 7: Preventing Stock Market Crises (V)
Regulating Information Manipulation by Sell-Side Analysts (Xin Yan, Lawrence R. Klein, Viktoria Dalko, Ferenc Gyurcsány and Michael H. Wang)
What is the Actual Role of Sell-side Analysts?
How is the Value of Sell-side Analysts' Work Defined?
Analysts Can Hardly Attend to Public Interests Fairly
Analyst-generated Information Benefits the Informed
Value of Analysts' Recommendation and Forecast to Issuers
Value of Analysts' Work to Investment Banks and Brokerage Firms
Comparison of Sell-side Analysts and Corporate Insiders
Legal Difficulty in Prosecuting Wrongdoing by Sell-side Analysts
Regulatory Proposals
Discussion of the Regulatory Proposals
Concluding Remarks
Notes
Chapter 8: Preventing Stock Market Crises (VI)
Regulating Information-Based Manipulation (Xin Yan, Lawrence R. Klein, Viktoria Dalko, Ferenc Gyurcsány and Michael H. Wang)
All Types of Market Manipulation Comes Down to Perception Manipulation
Anatomy of SEC Market Manipulation Litigation Cases (1999 - 2009)
Information-based Manipulation Schemes in Practice
Information-based Manipulation Schemes on the Internet
Analysis of Information-based Manipulation
Regulatory Recommendations
Discussion of Information Monopoly in Reality
Concluding Remarks
A Perspective for Future Research
Notes
Chapter 9: Preventing Stock Market Crises (VII)
Principles of Regulating News Reporting That Cultivates Long-Run Manias and Triggers Short-Run Panics (Xin Yan, Lawrence R. Klein, Viktoria Dalko, Ferenc Gyurcsány, and Michael H. Wang)
Information Monopoly and Certain Business News Reporting
A Prolonged Mania in Stock-buying Leads to a Market Wide Crisis
Some Business News Reporting is Capable of Moving Stock Prices in the Short-run
Some Business News Reporting Affects Individual Investors in the Long Run
Why is Business News Reporting Usually Upward Biased?
Proposed Principles to Regulate Relevant Business Journalists and Mass Media 9
Empirical Research on Impact of Some Breaking News on Stock Markets
Trading Halts, Circuit Breakers and Price Limits: Effectiveness and Limitations
Regulatory Principles in Case of Breaking News
Concluding Remarks
Notes
About the Authors
Index
Overview
Praise for Regulating Competition in Stock Markets
"A fascinating, wide-ranging analysis beginning with the adverse effects of the financial crisis on happiness, health, and suicide, then analyzing the manipulation of finance markets that presumably contributed to the crisis, and ending with regulatory cures."—Richard B. Freeman, PhD, Herbert S. Ascherman Professor of Economics, Harvard University, Fellow of the American Academy of Arts and Sciences, member of two panels of the National Academy of Sciences
"This ...