Opening price manipulation and its value influences

Jie Liu, Chonglin Wu, Lin Yuan, Jia Liu

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We investigate how opening price manipulation influences market behaviors and investors’ returns. Analyzing direct evidence comprising 87 opening price manipulation cases, and indirect evidence consisting of 19,003 suspected cases detected by an opening price manipulation identification model that we construct, we examine the impact of manipulation on mispricing, investors’ welfare, trading activity and price volatility. Our results indicate that manipulated stocks experience significantly lower returns and a higher probability of price reversal after manipulation. Investors who purchase manipulated stocks at their opening price, or the volume-weighted average price, on the manipulation day make losses on their investments. Further, manipulation increases market trading activity and price volatility due to the influx of retail investors. Our additional analysis demonstrates that enhancing the intensity of external supervision and internal governance can mitigate mispricing caused by opening price manipulation. Our study provides novel evidence of the economic consequences of open market manipulation and policy implications for governments and regulators to develop effective supervisory processes to reduce manipulation and mitigate its impact on efficient markets.
Original languageEnglish
Article number102256
Number of pages17
JournalInternational Review of Financial Analysis
Early online date16 Jul 2022
Publication statusPublished - 1 Oct 2022


  • opening price manipulation
  • mispricing
  • investors' welfare
  • corporate governance
  • market supervision


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