Paper Info
Title
The Economics Of Stock Touting During Internet-Based Pump And Dump Campaigns
Abstract
Information systems have facilitated the increase in relevance of financial markets. Nevertheless, the rise of the Internet has eased information-based financial market manipulations. In this study, we examine the phenomenon of stock touting during pump and dump campaigns, in which deceivers advertise stocks to profit from an increased price level. We observe that the positive prospects promised are not confirmed by corporate disclosures and financial news. Furthermore, manipulators select targeted financial instruments based on specific stock and company characteristics. Manipulators avoid signals of anomaly and prefer unknown stocks. We find that stock touting has a positive market impact but that it is followed by a large decline in stock price in the subsequent days, causing investors to lose substantial amounts of their investments. We consider the impact of information generation, information content, and information presentation on the corresponding market reaction. Interestingly, information generation influences the demand for the stock, but information content and information presentation drive the willingness to pay. Our results are highly relevant for Internet users, software vendors, and market surveillance authorities, as a deep understanding of such information-based manipulations is necessary to develop appropriate countermeasures.
Year
DOI
Venue
2019
10.1111/isj.12216
INFORMATION SYSTEMS JOURNAL
Keywords
Field
DocType
content analysis, deceptive information practices, event study, financial market manipulation, pump and dump manipulation, stock touting
Content analysis,Computer science,Knowledge management,Event study,The Internet
Journal
Volume
Issue
ISSN
29
2
1350-1917
Citations 
PageRank 
References 
1
0.36
20
Authors
1
Name
Order
Citations
PageRank
Michael Siering17110.51