Author(s)

Ding Liu ¹

Affiliation(s)

¹ Guangdong Lingnan Institute of Technology, School of Philanthropy, 492 Daguan Middle Rd, Guangzhou, Guangdong, China

Corresponding Author

Ding Liu

ABSTRACT

This study aims to examine the impact of the conviction of stock market misconduct on the Hong Kong stock market. To address the issue of seasonal fluctuation, this study utilized an extended difference-in-difference (DID) framework and implemented a harmonic linear model and Generalized Synthetic Control (GSC) method. Previous studies have reported that stock manipulation is harmful to the stock market and that lawsuits may damage reputation and thereby reduce investments; however, the current study indicates that the effects of conviction might be diverse. For instance, after controlling the seasonal fluctuation, some cases were found to have a positive influence, while others negatively impacted the Hong Kong stock market. Additionally, the results obtained through GSC methodology indicated that convictions might not have a clear long-term impact on the Hong Kong stock market.

KEYWORDS

Conviction, Hong Kong, Stock Market, Generalized Synthetic Control (GSC) method

CITE THIS PAPER

Ding Liu, Effect of Conviction of Hong Kong Stock Market Misconduct. Financial Engineering and Risk Management (2022) Vol. 5: 80-89. DOI: http://dx.doi.org/10.23977/ferm.2022.050310.

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