Research On Price Manipulation And Coping Mechanism Of False Information In China’s Securities Market

Since the establishment of securities market, false information has become thefocus of public attention and research. Most of the previous research focused on howto prevent false information in the disclosure by listed companies, making suggestionsbased on the regulatory system and laws. These studies have achieved some results.However it’s hard to do more effective regulation and governance by nature of theinformation from the securities market, specifically, its diversity of sources,complexity of motivations, uncontrollability of impact, and difficulty to tell its truth,especially those investors who have the power in the market (such as bankers, holdingmore shareholders, etc.), try to manipulate stock price by publishing and spreadingfalse information according to their own interests.In terms of China’s securities market now, false information spreads in somemainstream newspapers and network media, and its quantity, transmission speed,scope of influence, and impact strength are enhanced, especially those news wordsthat can have a significant impact on stock prices, such as "restructuring","capitalinjection","earnings growth" and "back-door listings" which is popular in falseinformation. This phenomenon shows directly that today the regulation andgovernance of false information has not yet reach the target, and the interest partiesthat compiling and publishing false information can get excess returns. Besides this,the effect of clarification announcement on false information still have someinsufficiency, while other investors especially the small and medium-sized investorsin the information disadvantage and following the hype will suffer a loss.Therefore, based on the above practical problems, this article will study theproblem of false information on the securities market by a variety of methods. Firstly,we make an empirical analysis of data from securities market itself, and study theimpact of false information on securities market price to reveal the price manipulationbehind the false information. Secondly, we will analyse the generation and functionmechanism of false information by popular at present behavioral finance, so that wecan find the deeper reasons behind it. Thirdly, we focus on the coping mechanisms offalse information, and use the model of game theory to explore the best strategy thatsocial supervisors, government regulators and clarification mechanism of listed companies can take to response to the false information in the securities market. In theend, the policies and suggestions will be given.