Stock Price Manipulation And "Tunneling"

Stock price manipulation is a kind of illegal behavior in security market, which can hurt minority investors' benefit seriously. As investor protection gets more and more attention, price manipulation and it's countermeasure has become one of society problems that public care. In practice, there seems to have correlation between company governance and price manipulation. So it may be effective to counter manipulation by improving company governance structure. However, existing literature gives little attention in this field, which is the main point of this dissertation.On the basis of comparing the meanings and characteristics of "tunneling" and price manipulation, the dissertation advances and demonstrates a new issue: manipulation is a kind of"tunneling" in essence, and the return of manipulation can be attributed to a kind of benefits of control which majority shareholders get by controlling stock price. Then, the dissertation makes a theory model to analyze how majority shareholders to tunnel through price manipulation. By using behaior finance theory, it disscusses the motive, process, manner, superiority and probability of manipulation that dominated by majority shareholder, and compare the difference of manipulation and other tunnelling manners such as capital impropriation. The research shows that, because of the predominance of ownership percentage, information and influence to company that majority shareholders have, they have inherent capability to manipulate stock price. Moreover. since "tunneling" through price manipulation has many advantages that others don't possess, it can also provide convenience to other "tunneling" behavior. Further analysis reveals that company governance structure is one of important factors which influence manipulation behavior of majority shareholders.By using samples of Chinese stock market, chapter four and chapter five make an observation to behaviorial characteristics of majority shareholders who participate in manipulation. Then the researcher selects a comparing company for each sample and tests the relationship between manipulation and stock structure, characteristics of directorate, insentive mechanism and characteristics of information disclosure. It can be found that if other factors are controlled, there exists significant difference in corporate governance structure for two groups. On the basis of above conclutions, the dissertation puts forward some suggestion to counter price manipulation in two aspect.