Research On A New Kind Of Market Manipulation Concealed By Market Value Management

After the reform of the shareholder structure,it becomes a better choice for listed companies to manage their market value in order to better reflect their intrinsic value and attract investors.However,the opaque feature of the contract of market value management has been providing opportunities for market manipulations.On Dec,19^th,2014,China Securities Regulatory Commission（CSRC）pointed out the behaviors of illegal information announcement coincident with market manipulation concealed by market value management for the first time.But it hasn’t been punished until Aug,11^th,2017,when the market manipulation of HKM Company been punished,from which we can see the difficulties of regulation.This paper uses the market manipulation of HKM Company as a case and discusses a way to distinguish this kind of market manipulation under the circumstances of difficult evidence obtaining.Several suggestions are also made to prevent and penalize this kind of manipulation aiming at its characteristics.At first,a literature review about market manipulation and market value management is conducted.Then the differences and similarities between market manipulation and market value management are introduced.The next part is the case study of HKM Company.Event study,absolute valuation and relative valuation methods are used in this part in order to find out whether or not the stock price of HKM Company deviates from its comparable index or fundamentals,which is expected to offer a way to distinguish this new kind of manipulation.And it comes out that although the stock price of HKM deviates from its comparable index;it coincides with its fundamentals.At last,features of this new kind of market manipulation are summarized from a special case to a general rule.It is considered that legislation needs to be further improved to link up the criminal law and administrative rules and to protect the interests of all sides.The CSRC needs to strengthen its regulation over disclosure and improve its hearing and appeal systems.The stock exchanges should strengthen their supervision at the frontline.And all sides in regulators need to tighter their cooperation.Listed companies should regularize their behaviors and preserve evidences of their trading decisions in case that they are under suspicion.Investors need to improve their professional knowledge and have their own judgments.They also need to protect their own legal rights when their interests are in damage.