Market Manipulation During Rights Offering: Evidence from the Tehran Stock Exchange

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Yekehzare, Mohammad Mehdi | 2019

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Type of Document: M.Sc. Thesis
Language: Farsi
Document No: 52788 (44)
University: Sharif University of Technology
Department: Management and Economics
Advisor(s): Ebrahimnejad, Ali
Abstract:
In this study, we investigate the phenomenon of price manipulation in rights offering transactions using the data of share capital increase, price and ownership of firms in Iranian capital market. We find that blockholders reduce the share price by selling stocks during the rights trading period and then buying the rights at lower prices. We further find that the shareholders who bought the highest amount of the rights tend to sell a higher percentage of shares during the trading period, and the cumulative abnormal return is inversely related to the rate of sale of these blockholders. We also observe that the probability of price manipulation is higher for stocks with lower liquidity and lower nominal price of stock discount to market price
Keywords:
Cumulative Abnormal Return ; Rights Offering ; Price Manipulation ; Blockholder ; Capital Increase

No TOC