Developing a Comprehensive Pattern of Preventing Stock Price Manipulation in Iran’s Capital Market: A Grounded Theory Approach

Document Type: Original Article

Authors

1 Prof., Department of Theoretical Economics, Faculty of Economics, Allameh Tabataba'i University, Tehran, Iran.

2 Associate Prof., Department of Business Economics, Faculty of Economics, Allameh Tabataba'i University, Tehran, Iran.

3 PH.D. Candidate, Department of Financial Economics, Faculty of Economics, Allameh Tabataba'i University, Tehran, Iran.

Abstract

The purpose of this research is to design a comprehensive model to prevent price manipulation in the Iranian capital market. The approach used in this research is qualitative and has been used as the research method from the theory of grounded data (grounded theory). The data collection was done in depth and open interviews with 26 capital market elites and professors and students from different universities. For data analysis, the comparison method has been used during three stages of open, axial and selective coding. With regard to the analysis of data, we have found that the comprehensive model for preventing price manipulation consists of six main categories, including regulatory mechanisms, legal mechanisms, educational mechanisms, cultural mechanisms, structural mechanisms and implementation of the pattern of prevention. The price manipulation is explained in detail. Finally, the circumstances, the conditions of the intervention, the conditions governing (strategies), the strategies and the consequences have been identified.

Keywords


Rezaei, Shamsuddin (1396), Modeling the Income Model of Iranian Football Clubs: A Grounded Theory Approach, Applied Research in Management, 6th year, No. 3, Winter 96.
Sajjadi, Seyyed Hossein, Kazemi, Tohid (1395), A Comprehensive Model of Fraudulent Financial Reporting in Iran by Theorization of Grounded Basis, Empirical Accounting Research, 6th Year, Autumn 1995.
Danaee Fard, Hassan; Islamic, Azar (1389). The Application of Theory Data The Foundation in Action: Making an Organizational Indifferentiation Theory. Imam Sadiq University Press (pbuh), Tehran, First edition, p. 12.
Danaee Fard, Hassan; Emami, Seyyed Mojtaba (1386), Qualitative Research Strategies: A Theory of Data Fundamentals, Management Thought, First Year, No. 2, Autumn and Winter 86.
Fallah Shams, Mirfeiz, Kordlouei, Hamid Reza, Rashnew, Mehdi (1391), Investigating price manipulation in Tehran Stock Exchange using a backup vector machine model, Journal of Financial Research, Spring and Summer 91.
Poust Forush, Mohammad Hossein, Naser Sadrabi, Alireza, Moein al-Din, Mahmoud (1394), Measuring price manipulation using second-order audit analysis models and genetic algorithm based on artificial neural network, Financial knowledge of securities analysis (financial studies) ), Winter 94
Heydari, Fariborz, Masoumian, Mohsen, Ansari, Mehdi (1394), Comparative Study on the Guarantee of the Execution of the Crime of Securities Market Manipulation in the Laws of Iran and the United States, International Conference on Modern Approaches to the Humanities
Shams, Shahabeddin, Ataei, Behrooz (1395), Identification of stock price manipulation through the combined model of genetic algorithm - artificial neural network and SQDF model, Quarterly Journal of Financial Management Strategy, Autumn 1995.
Mashayekhi, Bita et al. (1392), Compilation of Audit Quality Model, Stock Exchange Quarterly, 6.23.
Seif, Ali Akbar (1382), Psychology, Tehran, Awareness, Seventh Edition.
Naderi Far, Mahin, Goli, Hamideh, Gahjaei, Fereshteh (1396), Snowball, A Purposeful Method in Qualitative Research Sampling, Journal of Developmental Steps in Medical Education, Fourteenth Year.
Jarrow, R.A, (1992). Market manipulation, bubbles, corners, and short squeezes. Journal of Financial and Quantitative Analysis, 27(3), 311-336
Allen, F., Gale, D. (1992). Stock price manipulation. Review of Financial Studies, (5), 503–529. Bagnoli, M., Lipman, B. (1996). Stock price manipulation through takeover bids. Rand Journal of Economics, 27(1), 124–147
Khwaja, A. I., & Mian, A. (2003). Trading in phantom markets: Price manipulation in an emerging stock market. Working paper
Chakraborty, A., Yilmaz, B. (2004). Informed manipulation. Journal of Economic Theory, 114(1), 132–152.
Technical Committee of the International Organization of Securities Commissions, (2013). Investigating and prosecuting market manipulation
Imisiker, S., Tas, B. (2013). Which firms are more prone to stock market manipulation. Emerging market review, 16, 119-130
Canellos, G. S., Rangwala, T. S., Walfish, D. R., Jou, J. K., Palladino, Samantha, L. (2016). The law surrounding spoofing in the derivatives and securities markets, FIA L&C Conference, New York
Neupane, S., Rhee, G., Vithanage, K., Veeraraghavan, M. (2017). Trade-based manipulation: Beyond the prosecuted cases. Journal of corporate finance, 42, 115-130
Glaser, B. and Strauss, A. (1967), “The Discovery of the Grounded Theory: Strategies for QualitativeResearch”, New York.
Fernández, Walter D. (2004), Using the Glaserian Approach in Grounded Studies of Emerging Business Practices. Electronic Journal of Business Research Methods, 2(2).