A Case Study Of Stock Price Manipulation By Company J In The Name Of Market Capitalization Management

With the completion of the shareholding reform,market capitalization has become another measure of the strength of listed companies,and share price×equity is the external expression of the market value of enterprises.However,due to the lack of effectiveness and maturity of China’s capital market,there is often a discrepancy between the share price and the intrinsic real value of the enterprise,therefore,the concept of market capitalization management was introduced,and in May 2014,the State Council issued the "New Article 9" to encourage the establishment of a market capitalization management system to improve the situation.However,due to the lack of relevant regulation and the lack of awareness of market value management among capital market participants,irregularities such as stock price manipulation in the name of market value management have emerged one after another.In the same year,the CSRC informed that "internal and external collusion and selective release of information in the name of market value management" were the new changes and features of market manipulation cases at that time.In recent years,the CSRC has repeatedly mentioned in its enforcement summaries that stock price manipulation in the name of market value management is a prominent feature of the cases investigated and handled,and there are numerous cases of stock price manipulation related to "market value management",and the relevant penalties are issued with a lag.This type of behavior,which greatly disrupts the market in the name of justice,must be effectively identified and strictly prohibited.Based on this background,this paper selects as a case study the share price manipulation case of Company J,which was publicly punished by the CSRC in 2019.this case of Company J is one of the few cases clearly defined by the CSRC as “share price manipulation in the name of market value management” and is listed in the summary of typical cases,which is typical enough.After identifying the case,this paper compares the existing literature on market value management and share price manipulation and summarizes the current research results;then,we analyze the case,sort out the process of the share price manipulation of Company J,and analyze the reasons why the behavior of Company J is not market value management based on the description of "value creation and value management" by market value management theory.The paper then analyzes the reasons for the manipulation of Company J’s share price and finally proposes recommendations to prevent the manipulation from the perspective of the regulator.This paper finds that the behavior of Company J does not meet the criteria of market value management,and therefore does not belong to market value management;the stock price also deviates from the comparable indexes and fundamentals,and its behavior of raising the stock price has the essence of manipulation,and therefore belongs to stock price manipulation.According to the conclusion,this paper argues that regulators must improve the relevant system and strengthen supervision,listed companies should improve internal governance and enhance operational capabilities and strengthen their understanding of market value management,and investors should be rational and cautious and improve their analysis of the operational development of listed companies.