You are previewing Regulating Competition in Stock Markets: Antitrust Measures to Promote Fairness and Transparency through Investor Protection and Crisis Prevention.
O'Reilly logo
Regulating Competition in Stock Markets: Antitrust Measures to Promote Fairness and Transparency through Investor Protection and Crisis Prevention

Book Description

A guide to curbing monopoly power in stock markets

Engaging and informative, Regulating Competition in Stock Markets skillfully analyzes the impact of the recent global financial crisis on health and happiness, and uses this opportunity to put regulatory systems in perspective. Happiness is lost because of emotional and physical health deterioration resulting from the crisis. Therefore, the authors conclude that financial crisis prevention should be the focus of public policy.

This book is the most comprehensive study so far on potential risks to the stock market, especially various forms of market manipulation that lead to mania and eventual crisis. Based on litigation cases from international stock markets, and borrowing multidisciplinary findings in the fields of finance, economics, accounting, media studies, criminology, legal studies, psychology, and medicine, this book is the first to provide thorough micro-level regulatory proposals rooted in financial reality. By focusing on securities trading, they apply antitrust measures to limiting monopolistic power that is used for the manipulation of investors' perception and monopolistic profit. These proposals are quantifiable, adjustable, inexpensive, and can be easily implemented by any securities regulating agency for real-time oversight and daily operations.

  • The recommendations found here are intended to improve the fairness and transparency of the financial markets, thereby perfecting the market competition, protecting investors, stabilizing the market, and preventing crises

  • Explores how avoiding crises can to contribute to a more scientific, health aware, and civilized economic and social development

  • Written by a team of authors who have extensive experience in this dynamic field, including Nobel Laureate Lawrence R. Klein

Since the founding of the first, organized stock exchange in Amsterdam 400 years ago, no systematic economic research results on stock markets have been implemented in stock market regulation around the world. Regulating Competition in Stock Markets aims to fill this void.

Table of Contents

  1. Cover
  2. Series Page
  3. Title Page
  4. Copyright
  5. Dedication
  6. Foreword
  7. Introduction
    1. Back to the Original Question
    2. Our Expected Contribution
    3. Details of This Research Series
    4. Disclaimer: Not an Investment Guide
    5. Science, Health, and Civility
  8. Acknowledgments
  9. Part 1: Happiness, Health, and Longevity during the 2008 Global Financial Crisis
    1. Chapter 1: Does the Recent Financial Crisis Impact Health and Happiness?
      1. Concepts of Happiness
      2. The History of Modeling Health and Financial Crisis
      3. Our Three Objectives
      4. Our Financial Crisis–Impact Model
      5. Results
      6. Financial Crisis as a Major International Traumatic Event
      7. Can We Just Wait for the Next Financial Crisis?
    2. Chapter 2: Profound Unhappiness in the International Recession: The Case of Suicide in Industrialized Countries
      1. Background
      2. Two Concepts of Happiness
      3. A Psychological Viewpoint
      4. Unhappiness, Hopelessness, and Depression
      5. Hypothesis: Happiness as Accomplishment Predicts Happiness as Pleasure
      6. Analysis
      7. Conclusions
  10. Part 2: Imperfect Competition and Antitrust Regulations in the Stock Markets
    1. Chapter 3: Preventing Stock Market Crises (I): Regulating Shareholding Concentration
      1. Is Perfect Competition Possible in the Stock Market?
      2. Concentration, Manipulation, and Monopoly
      3. Can Stock Markets Still Be Manipulated?
      4. Theoretical Literature on Market Manipulation
      5. We Choose the Accumulation-Lift-Distribution Scheme to Study
      6. Manipulative Objective of Each Stage of the ALD Scheme
      7. Are Monopolistic Practices Involved in the ALD Scheme?
      8. Antitrust Against ALD Manipulation
      9. Existing Approach and Our Proposal to Regulate Market Manipulation
      10. Regulatory Proposal: A Generic Recommendation
      11. Benefits of Regulating Concentration
      12. Concluding Remarks and Future Research
    2. Chapter 4: Preventing Stock Market Crises (II): Regulating Trade-Based Price-Lifting
      1. How Is Large Price Impact by Other Investors Induced?
      2. Empirical Research on Volume-Based Price Impact
      3. The SEBI Prosecution Cases
      4. The Manipulation Tactics Used in Price Lifting
      5. Anatomy of an Investor's Trades in a Stock During a Trading Day
      6. Unified Approach to Surveillance and Regulatory Measures
      7. Selling Speed in Distribution and Short Selling
      8. Concluding Remarks
    3. Chapter 5: Preventing Stock Market Crises (III): Regulating Earnings Manipulation
      1. How Important Is Earnings Information to Investors?
      2. Earnings Manipulation Is Problematic
      3. How Is Earnings Manipulation Done in Reality?
      4. Earnings Manipulation Is Pervasive
      5. Earnings Manipulation Is Persistent
      6. Auditors Frequently Fail to Stop Earnings Manipulation
      7. Proposals to Effectively Regulate Earnings Manipulation
      8. Concluding Remarks
    4. Chapter 6: Preventing Stock Market Crises (IV): Regulating Trading by Corporate Insiders
      1. What Is the Purpose of Trading by Corporate Insiders?
      2. The Relationship between Earnings Manipulation and Trading by Corporate Insiders
      3. Trading by Corporate Insiders Is an Important Drive for Earnings Manipulation
      4. Insider Trading with Earnings Manipulation Is not Effectively Regulated
      5. Information Monopoly and Information Asymmetry
      6. Proposals to Effectively Regulate Trading by Corporate Insiders
      7. Discussion of the Four Proposed Measures
      8. Conclusion
    5. Chapter 7: Preventing Stock Market Crises (V): Regulating Information Manipulation by Sell-Side Analysts
      1. What Is the Actual Role of Sell-Side Analysts?
      2. How Is the Value of Sell-Side Analysts’ Work Defined?
      3. Analysts Can Hardly Attend Fairly to Public Interests
      4. Analyst-Generated Information Benefits the Informed
      5. Value of Analysts’ Recommendation and Forecast to Issuers
      6. Value of Analysts’ Work to Investment Banks and Brokerage Firms
      7. Comparison of Sell-Side Analysts and Corporate Insiders
      8. Legal Difficulty in Prosecuting Wrongdoing by Sell-Side Analysts
      9. Regulatory Proposals
      10. Discussion of the Regulatory Proposals
      11. Concluding Remarks
    6. Chapter 8: Preventing Stock Market Crises (VI): Regulating Information-Based Manipulation
      1. All Types of Market Manipulation Come Down to Perception Manipulation
      2. Anatomy of SEC Market Manipulation Litigation Cases (1999 to 2009)
      3. Information-Based Manipulation Schemes in Practice
      4. Information-Based Manipulation Schemes on the Internet
      5. Analysis of Information-Based Manipulation
      6. Regulatory Recommendations
      7. Discussion of Information Monopoly in Reality
      8. Concluding Remarks
      9. A Perspective for Future Research
    7. Chapter 9: Preventing Stock Market Crises (VII): Principles of Regulating New Reporting That Cultivates Long-Run Manias and Triggers Short-Run Panics
      1. Information Monopoly and Certain Business News Reporting
      2. A Prolonged Mania in Stock Buying Leads to a MarketWide Crisis
      3. Some Business News Reporting Is Capable of Moving Stock Prices in the Short Run
      4. Some Business News Reporting Affects Individual Investors in the Long Run
      5. Why Is Business News Reporting Usually Upward-Biased?
      6. Proposed Principles to Regulate Relevant Business Journalists and Mass Media
      7. Empirical Research on the Impact of Some Breaking News on Stock Markets
      8. Trading Halts, Circuit Breakers, and Price Limits: Effectiveness and Limitations
      9. Regulatory Principles in Case of Breaking News
      10. Concluding Remarks
  11. Bibliography
  12. About the Editors
  13. Index