Stock Price Manipulation

Price manipulations widely exist in China's stock market which is newly developed. Though there are many papers on price manipulation in foreign countries, there are few on price manipulation in china's stock market.Stock manipulation can be regarded as an illegal way to influence the stock price, in order to gain the profits. It appears when the stock market was established. In this text, we give the definition of stock manipulation and classify it as three types, we also analyze a sample of stocks which we penalized by China Securities Regulatory Commission for manipulation, by which we get the distinguishing features of those stocks .We also use investors' behavioral theory to discuss the manipulation .Investors' irrationality, which include positive feedback effect, disposition effect and bias of herd behavior, can be a cause of manipulation.The defaults in capital structure, ownership structure and investor structure, the lack of experience of government, and the information dissymmetry lead to a widely-existing manipulations in China.We give ways to find out a stock which has been manipulated, and we use one of those ways to do an empirical study to find out the evidence of manipulation in shanghai stock market.Price manipulations are a hindrance to the development of stock market. Investors lost their confidence, and good company can't get enough money to produce .At last, we give some suggestions to the governments about how they can prevent stock manipulation happening.