A Model of Stock Manipulation Ramping Tricks

Ramping tricks of trade-based stock manipulation have evolved greatly in the fight with stricter market regulation, and can be extremely complicated nowadays. Despite the rigidity and soundness, theoretical models proposed in extant literature can hardly be applied directly to real market data, due to their assumptions being far away from reality. On the other hand, empirical studies of ramping manipulation still lack guidance and support from theories that can better reflect ramping details in practice. This paper addresses this gap by constructing a theoretical model that is closely linked to practical detection, in the framework of behavioral finance. New insights into concrete ramping manipulation tricks are also contributed to the literature. The potential of the model for manipulation detection is demonstrated by applying it to the two most infamous manipulation cases in the history of Chinese stock market. Copyright Springer Science+Business Media New York 2015