Published Journal Articles by Viktoria Dalko
International Journal of Social Economics, 2018
• The research paper examines the historical relationship between economic development and health... more • The research paper examines the historical relationship between economic development and health improvement in the UK from 1541 to 2001.
• The paper compares the legal, technological and scientific attitudes and achievements in both domains, and finds a significant time lag and quantitative difference between them.
• The paper shows that economic development and health improvement supported each other in two distinct phases: a slower virtuous cycle from 1541 to 1871, and a faster virtuous cycle from 1871 to 2001.
• The paper argues that organized health improvement, led by the state, was a key factor for propelling economic growth in the latter phase, and raises the question of whether this developmental path is the only or the best way for other economies to follow.
The Global Financial Crisis and Its Aftermath, 2016
The key findings of the study are that monopoly power in the stock market can be created and exer... more The key findings of the study are that monopoly power in the stock market can be created and exercised through information-based market manipulation by a strategic trader. Successful execution of manipulation can result in substantial profit to the strategic trader but unfair losses to other investors, as well as excess volatility to the manipulated stocks. In addition, we propose that creation and exercise of monopoly power in the stock market is one mechanism that contributes to a widening income gap between market manipulators and the investing public.
Journal of Applied Business and Economics, 2018
Journal of Modern Accounting and Auditing, 2018
We challenge the arguments of Cooper et al. (2016), who defended some deceptive practices of high... more We challenge the arguments of Cooper et al. (2016), who defended some deceptive practices of high-frequency traders (HFTs) and advocated for deregulation of financial markets. The article claims that Cooper et al. (2016) ignored the negative impact of HFTs on market quality, stability, and ethics, and used a weak and misleading analogy of poker to justify deception in financial markets.
The article examines two common deceptive tactics used by HFTs: spoofing and quote stuffing. Spoofing involves submitting and cancelling large orders to induce other traders to trade in the desired direction, while quote stuffing involves flooding the market with orders and cancellations to create congestion and arbitrage opportunities2. The article argues that these tactics are manipulative, unethical, and illegal, and that they harm other investors and the market as a whole. The article discusses the recent regulatory developments in the US and the EU to curb HFTs and mitigate their deception-based consequences. The article supports the preventive, computerized, and more effective regulations that target trading activities rather than traders, such as the Limit Up-Limit Down Regulation, the maximum order-to-trade ratio, and the minimum resting time of displayed orders. The article concludes that these regulations reflect ethical concerns and may represent the future direction of financial regulation.
Journal of Banking Regulation, 2019
High-frequency trading (HFT) is a financial innovation that focuses on order flow and relies on q... more High-frequency trading (HFT) is a financial innovation that focuses on order flow and relies on quickly evolving information and communication technology. The innovation is successful, and HFT is highly and consistently profitable. However, the Flash Crash on 6 May 2010 exposed the unfamiliar side of HFT, thus illuminating the emergent need to unveil the negative impact that HFT has on other investors and the market. This paper examines data regarding quote-stuffing, spoofing, and market making provided by high-frequency (HF) traders, based on the increasing empirical literature. It first defines order-based manipulation (OBM) as the framework under which quote-stuffing, spoofing, and HF market making find common ground. It then provides details regarding how OBM is displayed in the three manipulation tactics. In essence, they all seek and exercise monopoly power in trading albeit through different ways of achieving it. The shared purpose is to gain monopolistic profit. The essence and common purpose explain why HF traders are not net liquidity providers, contrary to some proponents’ conclusions. Rather, this paper points out the three consequences that HF traders have brought to the market, i.e. increased volatility, increased frequency of unfairness, and instability potential. Recent regulatory improvement and completed prosecutions against manipulative HFT strategies justify the analysis.
Journal of Financial Regulation, 2018
The purpose of this paper is to assess the order-to-trade ratio (OTR) and resting time (RT) regul... more The purpose of this paper is to assess the order-to-trade ratio (OTR) and resting time (RT) regulations that aim to contain order-based manipulative high-frequency trading (HFT). The paper examines the mechanism of limit order display and uses spoofing as one typical order-based manipulative scheme as the basis for assessment. The examination provides a theoretical foundation for the assessment of the OTR and RT regulations. The paper finds that order-based manipulation is the foundation of manipulative HFT tactics that take advantage of the incomplete display of limit order history by the stock exchange. Regarding deterrence of spoofing, the RT regulation is more effective than the OTR regulation, as the former creates uncertainty regarding spoof orders.
Journal of Applied Business and Economics, 2018
Understanding that the stock market operates in a **VUCA** (volatility, uncertainty, complexity, ... more Understanding that the stock market operates in a **VUCA** (volatility, uncertainty, complexity, and ambiguity) environment is crucial for several reasons:
1. **Adaptability**: Recognizing the VUCA nature of the stock market allows investors, traders, and businesses to adapt swiftly to changing conditions. Strategies that work in stable environments may not be effective in a VUCA context. Being adaptable helps navigate market fluctuations and seize opportunities.
2. **Risk Management**: VUCA conditions introduce higher risks. By acknowledging volatility, uncertainty, and ambiguity, market participants can implement risk management practices. Diversification, hedging, and scenario planning become essential tools to mitigate potential losses.
3. **Strategic Decision-Making**: VUCA challenges demand different responses. For instance:
- **Volatility**: Rapid price movements require agile decision-making.
- **Uncertainty**: Understanding the impact of news events and economic shifts is crucial.
- **Complexity**: Analyzing intricate market dynamics helps make informed choices.
- **Ambiguity**: Navigating unclear situations requires creativity and flexibility.
4. **Ethical Considerations**: Recognizing ambiguity and complexity prompts ethical reflection. Traders and firms must weigh the consequences of their actions on market stability, fairness, and investor trust.
5. **Regulatory Implications**: VUCA-awareness informs financial regulations. Regulators aim to balance innovation with stability, addressing deceptive practices and ensuring market integrity.
In summary, acknowledging the VUCA nature of the stock market empowers stakeholders to make informed decisions, manage risks, and contribute to a resilient and ethical financial ecosystem.
Journal of Financial Crime, 2017
Purpose – The objectives of this paper are to study life-loss risk in some life insurance policie... more Purpose – The objectives of this paper are to study life-loss risk in some life insurance policies and propose solution to the problem found.
Design/methodology/approach – The paper analyzes the expected payout for murder-for-insurance. It presents legal evidence of 179 court cases and conducts criminological analysis. It compares the lack of safety regulation in life insurance with regulatory actions in selected food and automobile safety cases.
Findings – Some life insurance policies create incentive and therefore temptation for murder-for-insurance. The insured can face life-loss risk from not only the beneficiary but also from the life insurance agent during the term of the policy.
Practical implications – This paper proposes that defective life insurance policies should be recalled.
Social implications – The proposal has a policy implication of eliminating one type of homicide.
Originality/value – This paper is the first study of its kind as it places the safety of the insurance consumer in the center.
Keywords Murder-for-insurance risk, Criminological analysis, Risk analysis, Consumer safety, Recall
The Handbook of Mergers and Acquisitions, 2012
Leveraged buyouts have been the fastest-growing segment of mergers and
acquisitions (M&A), especi... more Leveraged buyouts have been the fastest-growing segment of mergers and
acquisitions (M&A), especially since 2001. Behind such a surge is the
globalization of private equity (PE)-sponsored leveraged buyouts (LBOs).
Historically, LBOs were greeted as the “solution to the agency problem” by
academics in the 1980s, and were promoted as the solution to the problem of the
otherwise lackluster return to M&As. As more attention has been paid to this
question by academic researchers recently, a rather different picture of reality
has emerged.
Keywords: leveraged buyout, private equity, globalization
Journal of Financial Regulation and Compliance, 2016
Purpose – The purpose of this paper is to assess the US Securities and Exchange Commission's new ... more Purpose – The purpose of this paper is to assess the US Securities and Exchange Commission's new regulation, Limit Up–Limit Down (LULD), against the background of manipulative high-frequency trading (HFT).
Design/methodology/approach – This paper examines the background of HFT and related manipulative tactics by reviewing 43 articles of empirical research. It also examines areas in which LULD is effective and those in which LULD fails. The assessment of LULD is completed with a comparison between computerized regulation and legal enforcement in the contemporary reality of electronic trading platforms.
Findings – The paper points out the effectiveness of LULD in regulating wild price volatility as well as its insufficiency when facing orderly but fast price momentum ignited by manipulative HFT such as " spoofing ". Practical implications – The findings may provide assistance to lawmakers and regulators to improve LULD regulation.
Originality/value – This paper is the first attempt to assess LULD regulation against a comprehensive background of manipulative HFT. The paper is of value to other researchers concerned about the instability to the equity market that manipulative HFT can create. The paper is also of interest to policymakers in designing effective regulation in the high-frequency era.
Qualitative Research in Financial Markets, 2016
Purpose
The purpose of this paper is to uncover an institutional reason behind herding and the k... more Purpose
The purpose of this paper is to uncover an institutional reason behind herding and the key to successful execution of the accumulation-lift-distribution (ALD) trading strategy.
Design/methodology/approach
The paper proposes the perception alignment hypothesis (PAH), which is based on a large number of empirical episodes. Extensive empirical and theoretical literature of 79 articles is reviewed. These are selected from previously unrelated fields of prosecuted cases in market manipulation, sell-side analysts’ recommendations and internet rumors. These studies are put into a unifying conceptual framework.
Findings
The proposed PAH can explain some herding episodes that were generated for the purpose of executing ALD.
Practical implications
The value of the approach is that while behavioral biases are hard to change, perception alignment can be more responsive to regulation.
Originality/value
This paper is the first to propose the PAH. It provides an explanation for the causality of herding that complements the traditional literature on the psychological weaknesses of investors. This paper opens a debate on whether the stock market is fully competitive because investors have behavioral biases and certain institutions take advantage of those biases.
Keywords:
Perception, Accumulation-Lift-Distribution, Herding, Perception alignment hypothesis, G01, G02, G110
Type:
Conceptual Paper
Publisher:
Emerald Group Publishing Limited
Received:
17 January 2016
Accepted:
02 May 2016
Acknowledgments:
The author thanks Dr Xin Yan for inspiration and Dr Michael H. Wang for helpful discussions. The author is also grateful to QRFM’s General Editor, Bruce M. Burton, and a reviewer for their encouragement and insightful comments.
Copyright:
© Emerald Group Publishing Limited 2016
Published by Emerald Group Publishing Limited
Licensed re-use rights only
Qualitative Research in Financial Markets
The purpose of this paper is to uncover an institutional reason behind herding and the key to suc... more The purpose of this paper is to uncover an institutional reason behind herding and the key to successful execution of the accumulation-lift-distribution (ALD) trading strategy. Design/methodology/approach-The paper proposes the perception alignment hypothesis (PAH), which is based on a large number of empirical episodes. Extensive empirical and theoretical literature of 79 articles is reviewed. These are selected from previously unrelated fields of prosecuted cases in market manipulation, sell-side analysts' recommendations and internet rumors. These studies are put into a unifying conceptual framework. Findings-The proposed PAH can explain some herding episodes that were generated for the purpose of executing ALD. Practical implications-The value of the approach is that while behavioral biases are hard to change, perception alignment can be more responsive to regulation. Originality/value-This paper is the first to propose the PAH. It provides an explanation for the causality of herding that complements the traditional literature on the psychological weaknesses of investors. This paper opens a debate on whether the stock market is fully competitive because investors have behavioral biases and certain institutions take advantage of those biases.
Studies in Economics and Finance, 2020
Purpose This paper aims to show that market power exists in financial markets and analyze how spo... more Purpose This paper aims to show that market power exists in financial markets and analyze how spoofing is used by a high-frequency trader to build market power by taking advantage of both behavioral weaknesses of individual investors and microstructural loopholes of trading venues. Design/methodology/approach After showing that market power exists in the financial market, this paper centers around the question of how market power is constructed in the financial market. To sharpen the answer to the question, the paper compares the conditions needed for market power construction in the financial market with those needed in the goods market. The paper selects spoofing, the frequently used order-based tactic in high-frequency trading strategies, to analyze in detail how spoof orders can ignite herding with market power building as the essence. The Flash Crash that occurred in the New York Stock Exchange on May 6, 2010 provides an excellent case of market power construction exhibited in ...
Journal of Financial Regulation, 2019
This paper assesses the recently enacted securities regulation, called the volume limit, by the S... more This paper assesses the recently enacted securities regulation, called the volume limit, by the Securities and Exchange Board of India. It reviews the literature on the negative consequences of large sale volumes on the stability of the stock market. The paper also examines the recent development of high-frequency trading in India. The two investigations unveil areas in which the regulation is effective and those in which it is inadequate. That is, the effectiveness of the regulation of the volume limit lies in reducing large price impacts due to genuine transactions. However, the inadequacy of this regulation is exposed when manipulation tactics arise regarding order display, such as spoofing by certain high-frequency traders.
Studies in Economics and Finance, 2016
Purpose
The purpose of this paper is to uncover the essence of insider trading, explain why insi... more Purpose
The purpose of this paper is to uncover the essence of insider trading, explain why insider trading law is ineffective and provide implications of the effectiveness of the law.
Design/methodology/approach
This conceptual paper offers three propositions. The first two are based on a literature review of 62 articles in empirical research to develop an understanding of the essence of insider trading and identify the areas in which insider trading is ineffective. This analysis is used in the third proposition to provide a direction in suggesting effective measures to improve insider trading law.
Findings
The essence of insider trading is that corporate insiders exercise informational monopoly power over their trades. This understanding explains why insider trading law is ineffective because it has not taken away the monopoly power that corporate insiders possess and exercise. This understanding also leads to three antitrust suggestions aimed at improving insider trading law.
Practical implications
The findings may provide assistance to the lawmakers and regulators to make insider trading law more effective and enforcement more simplified.
Originality/value
This paper is of value to other researchers attempting to understand the essence of insider trading and to policymakers concerned about the existence of monopolistic behavior in the equity market and income inequality due to corporate insiders’ trading profit.
Keywords:
Insider trading, Antitrust, Corporate insiders, Earnings manipulation, Informational monopoly power, Insider trading law
Klein, Dalko, Wang: Regulating competition by Viktoria Dalko
W hat is the key to information-based manipulation? The manipulator possesses an information mono... more W hat is the key to information-based manipulation? The manipulator possesses an information monopoly, exercises it in the trading strategy, and realizes unfair profit by trading against the publicly released information. The components of information monopolies are information with price-moving potential, its substantial publicity, and high credibility. With antitrust spirit in mind, we have recommended preventive measures targeting the inconsistency of the manipulator's trading with his publicly released information. The effectiveness of the measures lies in breaking the link between the manipulator's exercise of the information monopoly and his actual trading profit. These measures are quantifiable, adjustable, and easy to implement in daily regulatory operations. Compared to enforcement outcomes based on current disclosure-oriented securities laws, these measures are expected to be effective and efficient. They will benefit securities regulators in making related rules, in order to complement and perfect extant regulations. The reason to analyze empirical data and propose the measures in this chapter is to build perfect competition for trading profit in any stock As we have analyzed earlier in this chapter, the core of information-based manipulation is that the trader exercises an information monopoly. Regulatory proposals need to be designed to effectively break profitable but unfair Preventing Stock Market Crises (VI)
Antitrust Measures to Promote Fairness and Transparency through Investor Protection and Crisis Prevention, 2012
The article is about the impact of the global financial crisis of 2008 on health and happiness of... more The article is about the impact of the global financial crisis of 2008 on health and happiness of individuals, especially young professionals. The authors conducted a longitudinal survey of 335 former graduate students of theirs, who were mainly working in finance or economics, from spring 2008 to spring 2010. The survey measured the participants' happiness and health in four domains: emotional, physical, social, and economic.
The results showed that the financial crisis had a measurable and detrimental impact on happiness and health, especially emotional and economic health. Happiness declined sharply in fall 2008 and recovered gradually by fall 2009.
The authors also found that emotional health was the most important factor in determining happiness, followed by physical health, social relationship health, and economic health. They suggested that financial crisis prevention and emotional health promotion are important for enhancing well-being.
Are current secondary stock markets perfectly competitive? We present a unique hand-collected dat... more Are current secondary stock markets perfectly competitive? We present a unique hand-collected database from securities regulatory agencies that demonstrates stock price manipulation is a frequent and widespread event in the secondary market. Although countries that follow U.S. stock market regulation prohibit market manipulation by law, our findings show that market manipulation remains widespread and frequent in all the stock exchanges in our sample, including the United States, China, India, Japan, and Hong Kong. In-depth analysis of the manipulative objective of each stage of the popular Accumulation-Lift-Distribution scheme leads to the finding of mo-nopolistic pricing in the stock market, similar to predatory pricing in the goods market. Therefore, we conclude that monopoly power is frequently exercised in the stock markets investigated, and this market failure needs to be corrected through additional oversight, monitoring, and regulation. In the spirit of antitrust in the stock market, we recommend three quantifiable and adjustable measures to securities regulators that aim at effectively preventing stock market crises triggered by large shareholding concentration.
Inducing numerous trading volumes to follow in a short time period is the objective of the manipu... more Inducing numerous trading volumes to follow in a short time period is the objective of the manipulator at the lift stage of the Accumulation-Lift-Distribution (ALD) scheme. Generating large price impact is the natural tactic to carry out the objective. However, after distribution of large quantities of accumulated shares, if no other large buy volumes enter trading in the stock, the share price will collapse; this may result in substantial losses for numerous investors and has the potential to lead to a stock market crisis. Large price impact can also be generated by heavy short selling or simply releasing large sell positions. Therefore, large price impact has to be regulated to protect investors, prevent crises, and maintain a stable stock market. This chapter, as a continuation of Chapter 3, focuses on price lifting in the ALD manipulation scheme and other related scenarios. For the purpose of surveillance and regulatory proposals, selected cases out of 103 prosecution cases from five regulatory agencies in both developed and developing economies are closely examined. The anatomy of trading activities of an investor during one trading day reveals nine variables that provide areas for
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Published Journal Articles by Viktoria Dalko
• The paper compares the legal, technological and scientific attitudes and achievements in both domains, and finds a significant time lag and quantitative difference between them.
• The paper shows that economic development and health improvement supported each other in two distinct phases: a slower virtuous cycle from 1541 to 1871, and a faster virtuous cycle from 1871 to 2001.
• The paper argues that organized health improvement, led by the state, was a key factor for propelling economic growth in the latter phase, and raises the question of whether this developmental path is the only or the best way for other economies to follow.
The article examines two common deceptive tactics used by HFTs: spoofing and quote stuffing. Spoofing involves submitting and cancelling large orders to induce other traders to trade in the desired direction, while quote stuffing involves flooding the market with orders and cancellations to create congestion and arbitrage opportunities2. The article argues that these tactics are manipulative, unethical, and illegal, and that they harm other investors and the market as a whole. The article discusses the recent regulatory developments in the US and the EU to curb HFTs and mitigate their deception-based consequences. The article supports the preventive, computerized, and more effective regulations that target trading activities rather than traders, such as the Limit Up-Limit Down Regulation, the maximum order-to-trade ratio, and the minimum resting time of displayed orders. The article concludes that these regulations reflect ethical concerns and may represent the future direction of financial regulation.
1. **Adaptability**: Recognizing the VUCA nature of the stock market allows investors, traders, and businesses to adapt swiftly to changing conditions. Strategies that work in stable environments may not be effective in a VUCA context. Being adaptable helps navigate market fluctuations and seize opportunities.
2. **Risk Management**: VUCA conditions introduce higher risks. By acknowledging volatility, uncertainty, and ambiguity, market participants can implement risk management practices. Diversification, hedging, and scenario planning become essential tools to mitigate potential losses.
3. **Strategic Decision-Making**: VUCA challenges demand different responses. For instance:
- **Volatility**: Rapid price movements require agile decision-making.
- **Uncertainty**: Understanding the impact of news events and economic shifts is crucial.
- **Complexity**: Analyzing intricate market dynamics helps make informed choices.
- **Ambiguity**: Navigating unclear situations requires creativity and flexibility.
4. **Ethical Considerations**: Recognizing ambiguity and complexity prompts ethical reflection. Traders and firms must weigh the consequences of their actions on market stability, fairness, and investor trust.
5. **Regulatory Implications**: VUCA-awareness informs financial regulations. Regulators aim to balance innovation with stability, addressing deceptive practices and ensuring market integrity.
In summary, acknowledging the VUCA nature of the stock market empowers stakeholders to make informed decisions, manage risks, and contribute to a resilient and ethical financial ecosystem.
Design/methodology/approach – The paper analyzes the expected payout for murder-for-insurance. It presents legal evidence of 179 court cases and conducts criminological analysis. It compares the lack of safety regulation in life insurance with regulatory actions in selected food and automobile safety cases.
Findings – Some life insurance policies create incentive and therefore temptation for murder-for-insurance. The insured can face life-loss risk from not only the beneficiary but also from the life insurance agent during the term of the policy.
Practical implications – This paper proposes that defective life insurance policies should be recalled.
Social implications – The proposal has a policy implication of eliminating one type of homicide.
Originality/value – This paper is the first study of its kind as it places the safety of the insurance consumer in the center.
Keywords Murder-for-insurance risk, Criminological analysis, Risk analysis, Consumer safety, Recall
acquisitions (M&A), especially since 2001. Behind such a surge is the
globalization of private equity (PE)-sponsored leveraged buyouts (LBOs).
Historically, LBOs were greeted as the “solution to the agency problem” by
academics in the 1980s, and were promoted as the solution to the problem of the
otherwise lackluster return to M&As. As more attention has been paid to this
question by academic researchers recently, a rather different picture of reality
has emerged.
Keywords: leveraged buyout, private equity, globalization
Design/methodology/approach – This paper examines the background of HFT and related manipulative tactics by reviewing 43 articles of empirical research. It also examines areas in which LULD is effective and those in which LULD fails. The assessment of LULD is completed with a comparison between computerized regulation and legal enforcement in the contemporary reality of electronic trading platforms.
Findings – The paper points out the effectiveness of LULD in regulating wild price volatility as well as its insufficiency when facing orderly but fast price momentum ignited by manipulative HFT such as " spoofing ". Practical implications – The findings may provide assistance to lawmakers and regulators to improve LULD regulation.
Originality/value – This paper is the first attempt to assess LULD regulation against a comprehensive background of manipulative HFT. The paper is of value to other researchers concerned about the instability to the equity market that manipulative HFT can create. The paper is also of interest to policymakers in designing effective regulation in the high-frequency era.
The purpose of this paper is to uncover an institutional reason behind herding and the key to successful execution of the accumulation-lift-distribution (ALD) trading strategy.
Design/methodology/approach
The paper proposes the perception alignment hypothesis (PAH), which is based on a large number of empirical episodes. Extensive empirical and theoretical literature of 79 articles is reviewed. These are selected from previously unrelated fields of prosecuted cases in market manipulation, sell-side analysts’ recommendations and internet rumors. These studies are put into a unifying conceptual framework.
Findings
The proposed PAH can explain some herding episodes that were generated for the purpose of executing ALD.
Practical implications
The value of the approach is that while behavioral biases are hard to change, perception alignment can be more responsive to regulation.
Originality/value
This paper is the first to propose the PAH. It provides an explanation for the causality of herding that complements the traditional literature on the psychological weaknesses of investors. This paper opens a debate on whether the stock market is fully competitive because investors have behavioral biases and certain institutions take advantage of those biases.
Keywords:
Perception, Accumulation-Lift-Distribution, Herding, Perception alignment hypothesis, G01, G02, G110
Type:
Conceptual Paper
Publisher:
Emerald Group Publishing Limited
Received:
17 January 2016
Accepted:
02 May 2016
Acknowledgments:
The author thanks Dr Xin Yan for inspiration and Dr Michael H. Wang for helpful discussions. The author is also grateful to QRFM’s General Editor, Bruce M. Burton, and a reviewer for their encouragement and insightful comments.
Copyright:
© Emerald Group Publishing Limited 2016
Published by Emerald Group Publishing Limited
Licensed re-use rights only
The purpose of this paper is to uncover the essence of insider trading, explain why insider trading law is ineffective and provide implications of the effectiveness of the law.
Design/methodology/approach
This conceptual paper offers three propositions. The first two are based on a literature review of 62 articles in empirical research to develop an understanding of the essence of insider trading and identify the areas in which insider trading is ineffective. This analysis is used in the third proposition to provide a direction in suggesting effective measures to improve insider trading law.
Findings
The essence of insider trading is that corporate insiders exercise informational monopoly power over their trades. This understanding explains why insider trading law is ineffective because it has not taken away the monopoly power that corporate insiders possess and exercise. This understanding also leads to three antitrust suggestions aimed at improving insider trading law.
Practical implications
The findings may provide assistance to the lawmakers and regulators to make insider trading law more effective and enforcement more simplified.
Originality/value
This paper is of value to other researchers attempting to understand the essence of insider trading and to policymakers concerned about the existence of monopolistic behavior in the equity market and income inequality due to corporate insiders’ trading profit.
Keywords:
Insider trading, Antitrust, Corporate insiders, Earnings manipulation, Informational monopoly power, Insider trading law
Klein, Dalko, Wang: Regulating competition by Viktoria Dalko
The results showed that the financial crisis had a measurable and detrimental impact on happiness and health, especially emotional and economic health. Happiness declined sharply in fall 2008 and recovered gradually by fall 2009.
The authors also found that emotional health was the most important factor in determining happiness, followed by physical health, social relationship health, and economic health. They suggested that financial crisis prevention and emotional health promotion are important for enhancing well-being.
• The paper compares the legal, technological and scientific attitudes and achievements in both domains, and finds a significant time lag and quantitative difference between them.
• The paper shows that economic development and health improvement supported each other in two distinct phases: a slower virtuous cycle from 1541 to 1871, and a faster virtuous cycle from 1871 to 2001.
• The paper argues that organized health improvement, led by the state, was a key factor for propelling economic growth in the latter phase, and raises the question of whether this developmental path is the only or the best way for other economies to follow.
The article examines two common deceptive tactics used by HFTs: spoofing and quote stuffing. Spoofing involves submitting and cancelling large orders to induce other traders to trade in the desired direction, while quote stuffing involves flooding the market with orders and cancellations to create congestion and arbitrage opportunities2. The article argues that these tactics are manipulative, unethical, and illegal, and that they harm other investors and the market as a whole. The article discusses the recent regulatory developments in the US and the EU to curb HFTs and mitigate their deception-based consequences. The article supports the preventive, computerized, and more effective regulations that target trading activities rather than traders, such as the Limit Up-Limit Down Regulation, the maximum order-to-trade ratio, and the minimum resting time of displayed orders. The article concludes that these regulations reflect ethical concerns and may represent the future direction of financial regulation.
1. **Adaptability**: Recognizing the VUCA nature of the stock market allows investors, traders, and businesses to adapt swiftly to changing conditions. Strategies that work in stable environments may not be effective in a VUCA context. Being adaptable helps navigate market fluctuations and seize opportunities.
2. **Risk Management**: VUCA conditions introduce higher risks. By acknowledging volatility, uncertainty, and ambiguity, market participants can implement risk management practices. Diversification, hedging, and scenario planning become essential tools to mitigate potential losses.
3. **Strategic Decision-Making**: VUCA challenges demand different responses. For instance:
- **Volatility**: Rapid price movements require agile decision-making.
- **Uncertainty**: Understanding the impact of news events and economic shifts is crucial.
- **Complexity**: Analyzing intricate market dynamics helps make informed choices.
- **Ambiguity**: Navigating unclear situations requires creativity and flexibility.
4. **Ethical Considerations**: Recognizing ambiguity and complexity prompts ethical reflection. Traders and firms must weigh the consequences of their actions on market stability, fairness, and investor trust.
5. **Regulatory Implications**: VUCA-awareness informs financial regulations. Regulators aim to balance innovation with stability, addressing deceptive practices and ensuring market integrity.
In summary, acknowledging the VUCA nature of the stock market empowers stakeholders to make informed decisions, manage risks, and contribute to a resilient and ethical financial ecosystem.
Design/methodology/approach – The paper analyzes the expected payout for murder-for-insurance. It presents legal evidence of 179 court cases and conducts criminological analysis. It compares the lack of safety regulation in life insurance with regulatory actions in selected food and automobile safety cases.
Findings – Some life insurance policies create incentive and therefore temptation for murder-for-insurance. The insured can face life-loss risk from not only the beneficiary but also from the life insurance agent during the term of the policy.
Practical implications – This paper proposes that defective life insurance policies should be recalled.
Social implications – The proposal has a policy implication of eliminating one type of homicide.
Originality/value – This paper is the first study of its kind as it places the safety of the insurance consumer in the center.
Keywords Murder-for-insurance risk, Criminological analysis, Risk analysis, Consumer safety, Recall
acquisitions (M&A), especially since 2001. Behind such a surge is the
globalization of private equity (PE)-sponsored leveraged buyouts (LBOs).
Historically, LBOs were greeted as the “solution to the agency problem” by
academics in the 1980s, and were promoted as the solution to the problem of the
otherwise lackluster return to M&As. As more attention has been paid to this
question by academic researchers recently, a rather different picture of reality
has emerged.
Keywords: leveraged buyout, private equity, globalization
Design/methodology/approach – This paper examines the background of HFT and related manipulative tactics by reviewing 43 articles of empirical research. It also examines areas in which LULD is effective and those in which LULD fails. The assessment of LULD is completed with a comparison between computerized regulation and legal enforcement in the contemporary reality of electronic trading platforms.
Findings – The paper points out the effectiveness of LULD in regulating wild price volatility as well as its insufficiency when facing orderly but fast price momentum ignited by manipulative HFT such as " spoofing ". Practical implications – The findings may provide assistance to lawmakers and regulators to improve LULD regulation.
Originality/value – This paper is the first attempt to assess LULD regulation against a comprehensive background of manipulative HFT. The paper is of value to other researchers concerned about the instability to the equity market that manipulative HFT can create. The paper is also of interest to policymakers in designing effective regulation in the high-frequency era.
The purpose of this paper is to uncover an institutional reason behind herding and the key to successful execution of the accumulation-lift-distribution (ALD) trading strategy.
Design/methodology/approach
The paper proposes the perception alignment hypothesis (PAH), which is based on a large number of empirical episodes. Extensive empirical and theoretical literature of 79 articles is reviewed. These are selected from previously unrelated fields of prosecuted cases in market manipulation, sell-side analysts’ recommendations and internet rumors. These studies are put into a unifying conceptual framework.
Findings
The proposed PAH can explain some herding episodes that were generated for the purpose of executing ALD.
Practical implications
The value of the approach is that while behavioral biases are hard to change, perception alignment can be more responsive to regulation.
Originality/value
This paper is the first to propose the PAH. It provides an explanation for the causality of herding that complements the traditional literature on the psychological weaknesses of investors. This paper opens a debate on whether the stock market is fully competitive because investors have behavioral biases and certain institutions take advantage of those biases.
Keywords:
Perception, Accumulation-Lift-Distribution, Herding, Perception alignment hypothesis, G01, G02, G110
Type:
Conceptual Paper
Publisher:
Emerald Group Publishing Limited
Received:
17 January 2016
Accepted:
02 May 2016
Acknowledgments:
The author thanks Dr Xin Yan for inspiration and Dr Michael H. Wang for helpful discussions. The author is also grateful to QRFM’s General Editor, Bruce M. Burton, and a reviewer for their encouragement and insightful comments.
Copyright:
© Emerald Group Publishing Limited 2016
Published by Emerald Group Publishing Limited
Licensed re-use rights only
The purpose of this paper is to uncover the essence of insider trading, explain why insider trading law is ineffective and provide implications of the effectiveness of the law.
Design/methodology/approach
This conceptual paper offers three propositions. The first two are based on a literature review of 62 articles in empirical research to develop an understanding of the essence of insider trading and identify the areas in which insider trading is ineffective. This analysis is used in the third proposition to provide a direction in suggesting effective measures to improve insider trading law.
Findings
The essence of insider trading is that corporate insiders exercise informational monopoly power over their trades. This understanding explains why insider trading law is ineffective because it has not taken away the monopoly power that corporate insiders possess and exercise. This understanding also leads to three antitrust suggestions aimed at improving insider trading law.
Practical implications
The findings may provide assistance to the lawmakers and regulators to make insider trading law more effective and enforcement more simplified.
Originality/value
This paper is of value to other researchers attempting to understand the essence of insider trading and to policymakers concerned about the existence of monopolistic behavior in the equity market and income inequality due to corporate insiders’ trading profit.
Keywords:
Insider trading, Antitrust, Corporate insiders, Earnings manipulation, Informational monopoly power, Insider trading law
The results showed that the financial crisis had a measurable and detrimental impact on happiness and health, especially emotional and economic health. Happiness declined sharply in fall 2008 and recovered gradually by fall 2009.
The authors also found that emotional health was the most important factor in determining happiness, followed by physical health, social relationship health, and economic health. They suggested that financial crisis prevention and emotional health promotion are important for enhancing well-being.