Which firms are more prone to stock market manipulation?

Abstract

This study empirically investigates which firms are more susceptible to successful manipulation. For this purpose, a unique data set consisting of manipulation cases from 1998 to 2006 from the Istanbul Stock Exchange (ISE) was collected and firm-specific variables are used to explain these manipulations. Probit regression results show that small firms, firms with less free float rate and a higher leverage ratio are more prone to stock price manipulation. Dynamic probit analysis concludes that the probability of manipulation of a stock is significantly higher for stocks that have been previously manipulated.