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.
Foreword by Franklin Allen Introduction Acknowledgments Chapter 1: Does the Recent Financial Crisis Impact Health and Happiness? (Xin Yan, Lawrence R. Klein, Viktoria Dalko, Ferenc Gyurcsany, Michael H. Wang and Christine Huang) Concepts of Happiness The History of Modeling Health and Financial Crisis Our Three Objectives Our Financial Crisis Impact Model Results Financial Crisis as a Major International Traumatic Event Can We Just Wait for the Next Financial Crisis? Notes Chapter 2: Profound Unhappiness in the International Recession The Case of Suicide in Industrialized Countries (M. Harvey Brenner) Background Two Concepts of Happiness A Psychological Viewpoint Unhappiness, Hopelessness and Depression Hypothesis: Happiness as Accomplishment Predicts Happiness as Pleasure Analysis Conclusions Chapter 3: Preventing Stock Market Crises (I) Regulating Share Holding Concentration (Xin Yan, Lawrence R. Klein, Viktoria Dalko, Ferenc Gyurcsany and Michael H. Wang) Is Perfect Competition Possible in the Stock Market? Concentration, Manipulation, and Monopoly Can Stock Markets Still be Manipulated? Theoretical Literature on Market Manipulation We choose the Accumulation-Lift-Distribution (A-L-D) scheme to study Manipulative Objective of Each Stage of the A-L-D Scheme Are Monopolistic Practices Involved in the A-L-D Scheme? Antitrust Against A-L-D Manipulation Existing Approach and our Proposal to Regulate Market Manipulation Regulatory Proposal: A Generic Recommendation Benefits of Regulating Concentration Concluding Remarks and Future Research Notes Chapter 4: Preventing Stock Market Crises (II) Regulating Trade-based Price-lifting (Xin Yan, Lawrence R. Klein, Viktoria Dalko, Ferenc Gyurcsany and Michael H. Wang) How is Large Price Impact by other Investors Induced? Empirical Research on Volume-based Price Impact The SEBI Prosecution Cases The Manipulation Tactics Used in Price-lifting Anatomy of an Investor's Trades in a Stock During a Trading Day Unified Approach to Surveillance and Regulatory Measures Selling Speed in Distribution and Short-selling Concluding Remarks Notes Chapter 5: Preventing Stock Market Crises (III) Regulating Earnings Manipulation (Xin Yan, Lawrence R. Klein, Viktoria Dalko, Ferenc Gyurcsany and Michael H. Wang) How Important is Earnings Information to Investors? Earnings Manipulation is Problematic How is Earnings Manipulation Done in Reality? Earnings Manipulation is Pervasive Earnings Manipulation is Persistent Auditors Frequently Fail to Stop Earnings Manipulation Proposals to Effectively Regulate Earnings Manipulation Concluding Remarks Notes Chapter 6: Preventing Stock Market Crises (IV) Regulating Trading by Corporate Insiders (Xin Yan, Lawrence R. Klein, Viktoria Dalko, Ferenc Gyurcsany and Michael H. Wang) What is the Purpose of Trading by Corporate Insiders? The Relationship Between Earnings Manipulation and Trading by Corporate Insiders Trading by Corporate Insiders is an Important Drive for Earnings Manipulation Insider Trading with Earnings Manipulation is not Effectively Regulated Information Monopoly and Information Asymmetry Proposals to Regulate Effectively Trading by Corporate Insiders Discussion of the Four Proposed Measures Conclusion Notes Chapter 7: Preventing Stock Market Crises (V) Regulating Information Manipulation by Sell-Side Analysts (Xin Yan, Lawrence R. Klein, Viktoria Dalko, Ferenc Gyurcsany and Michael H. Wang) What is the Actual Role of Sell-side Analysts? How is the Value of Sell-side Analysts' Work Defined? Analysts Can Hardly Attend to Public Interests Fairly Analyst-generated Information Benefits the Informed Value of Analysts' Recommendation and Forecast to Issuers Value of Analysts' Work to Investment Banks and Brokerage Firms Comparison of Sell-side Analysts and Corporate Insiders Legal Difficulty in Prosecuting Wrongdoing by Sell-side Analysts Regulatory Proposals Discussion of the Regulatory Proposals Concluding Remarks Notes Chapter 8: Preventing Stock Market Crises
