Analysis Of The Speculative Situation Using The Inside Information Of M&A

At an emerging security market, the insider information manipulation resultsfrom the immature security market itself in obtaining "information rent". In theprocess of collecting the rent, listed companies and institutional speculators collude toform a strategic rent coalition with the information dominance and strong fund power,so as to manipulate share prices and obtain abnormal returns. China stock market isan immature market, information imperfection and information asymmetry are one ofits prominent characteristics. There exists some inevitability of the collaborationbetween the insider information and the stock price manipulation. In order to findsome clues about the actual speculative situation using the M&A insider informationand by price manipulation in our stock market, the historical prices of the M&A stockduring 2000 and 2002 are analyzed based on the Event Study Methodology. Thefindings include: 1) the insider trading using the M&A information is not so popularin China stock market as people usually feel. 2) Prices of some stocks weremanipulated heavily. 3) There exited a trend that the manipulations were becomingless with the time going. After discussing the deep reasons of the existence of theinside trading in China stock market, some proposals and advices to eliminate thisphenomena are provided.