{"product_id":"corruption-and-fraud-in-financial-markets-isbn-9781119421771","title":"Corruption and Fraud in Financial Markets","description":"\u003cp\u003e\u003cb\u003eIdentifying malpractice and misconduct should be top priority for financial risk managers today\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003ci\u003eCorruption and Fraud in Financial Markets\u003c\/i\u003e identifies potential issues surrounding all types of fraud, misconduct, price\/volume manipulation and other forms of malpractice. Chapters cover detection, prevention and regulation of corruption and fraud within different financial markets. Written by experts at the forefront of finance and risk management, this book details the many practices that bring potentially devastating consequences, including insider trading, bribery, false disclosure, frontrunning, options backdating, and improper execution or broker-agency relationships.\u003c\/p\u003e \u003cp\u003eInformed but corrupt traders manipulate prices in dark pools run by investment banks, using anonymous deals to move prices in their own favour, extracting value from ordinary investors time and time again. Strategies such as wash, ladder and spoofing trades are rife, even on regulated exchanges – and in unregulated cryptocurrency exchanges one can even see these manipulative quotes happening real-time in the limit order book. More generally, financial market misconduct and fraud affects about 15 percent of publicly listed companies each year and the resulting fines can devastate an organisation's budget and initiate a tailspin from which it may never recover.\u003c\/p\u003e \u003cp\u003eThis book gives you a deeper understanding of all these issues to help prevent you and your company from falling victim to unethical practices.\u003c\/p\u003e \u003cul\u003e \u003cli\u003eLearn about the different types of corruption and fraud and where they may be hiding in your organisation\u003c\/li\u003e \u003cli\u003eIdentify improper relationships and conflicts of interest before they become a problem\u003c\/li\u003e \u003cli\u003eUnderstand the regulations surrounding market misconduct, and how they affect your firm\u003c\/li\u003e \u003cli\u003ePrevent budget-breaking fines and other potentially catastrophic consequences\u003c\/li\u003e \u003c\/ul\u003e \u003cp\u003eSince the LIBOR scandal, many major banks have been fined billions of dollars for manipulation of prices, exchange rates and interest rates. Headline cases aside, misconduct and fraud is uncomfortably prevalent in a large number of financial firms; it can exist in a wide variety of forms, with practices in multiple departments, making self-governance complex. \u003ci\u003eCorruption and Fraud in Financial Markets\u003c\/i\u003e is a comprehensive guide to identifying and stopping potential problems before they reach the level of finable misconduct.\u003c\/p\u003e \u003cp\u003eAbout the Editors xv\u003c\/p\u003e \u003cp\u003eList of Contributors xvii\u003c\/p\u003e \u003cp\u003eForeword xix\u003c\/p\u003e \u003cp\u003eAcknowledgements xxi\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 1: Introduction 1\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eCarol Alexander and Douglas Cumming\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart I What are Manipulation and Fraud and Why Do They Matter? 11\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 2: An Overview of Market Manipulation 13\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eTālis J. Putniņš\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e2.1 Introduction 14\u003c\/p\u003e \u003cp\u003e2.2 Definitions of Market Manipulation 16\u003c\/p\u003e \u003cp\u003e2.2.1 Legal Interpretation and Provisions against Market Manipulation 16\u003c\/p\u003e \u003cp\u003e2.2.2 Economics and Legal Studies Perspective 18\u003c\/p\u003e \u003cp\u003e2.3 A Taxonomy of the Types of Market Manipulation 19\u003c\/p\u003e \u003cp\u003e2.3.1 Categories of Market Manipulation 19\u003c\/p\u003e \u003cp\u003e2.3.2 Market Manipulation Techniques 22\u003c\/p\u003e \u003cp\u003e2.4 Research on Market Manipulation 26\u003c\/p\u003e \u003cp\u003e2.4.1 Theoretical Literature 27\u003c\/p\u003e \u003cp\u003e2.4.2 Empirical Literature 30\u003c\/p\u003e \u003cp\u003e2.4.3 Conclusions from the Research on Market Manipulation 35\u003c\/p\u003e \u003cp\u003e2.5 Summary and Conclusions 39\u003c\/p\u003e \u003cp\u003eReferences 40\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 3: A Taxonomy of Financial Market Misconduct 45\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eAi Deng and Priyank Gandhi\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e3.1 Introduction 46\u003c\/p\u003e \u003cp\u003e3.2 Challenges in Research on Financial Market Misconduct 50\u003c\/p\u003e \u003cp\u003e3.3 Defining Financial Market Misconduct 51\u003c\/p\u003e \u003cp\u003e3.3.1 Price Manipulation 53\u003c\/p\u003e \u003cp\u003e3.3.2 Circular Trading 54\u003c\/p\u003e \u003cp\u003e3.3.3 Collusion and Information Sharing 55\u003c\/p\u003e \u003cp\u003e3.3.4 Inside Information 56\u003c\/p\u003e \u003cp\u003e3.3.5 Reference Price Influence 56\u003c\/p\u003e \u003cp\u003e3.3.6 Improper Order Handling 57\u003c\/p\u003e \u003cp\u003e3.3.7 Misleading Customers 58\u003c\/p\u003e \u003cp\u003e3.4 Defining Financial Fraud 59\u003c\/p\u003e \u003cp\u003e3.4.1 Credit Card Fraud 59\u003c\/p\u003e \u003cp\u003e3.4.2 Money Laundering 60\u003c\/p\u003e \u003cp\u003e3.4.3 Financial Statement Fraud 60\u003c\/p\u003e \u003cp\u003e3.4.4 Computer Intrusion Fraud 61\u003c\/p\u003e \u003cp\u003e3.5 Conclusion 61\u003c\/p\u003e \u003cp\u003eReferences 61\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 4: Financial Misconduct and Market-Based Penalties 65\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eChelsea Liu and Alfred Yawson\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e4.1 Introduction 66\u003c\/p\u003e \u003cp\u003e4.2 Notable Cases of Financial Reporting Fraud 69\u003c\/p\u003e \u003cp\u003e4.3 Financial Reporting Misconduct and Legal Redress 70\u003c\/p\u003e \u003cp\u003e4.4 Evolution of US Financial Regulations 71\u003c\/p\u003e \u003cp\u003e4.4.1 Private Securities Litigation Reform Act (1995) 72\u003c\/p\u003e \u003cp\u003e4.4.2 Sarbanes–Oxley Act (2002) 72\u003c\/p\u003e \u003cp\u003e4.4.3 Dodd–Frank Act (2010) 73\u003c\/p\u003e \u003cp\u003e4.5 Legal versus Market-Based Penalties for Financial Misconduct 74\u003c\/p\u003e \u003cp\u003e4.5.1 Common Forms of Legal Penalties 74\u003c\/p\u003e \u003cp\u003e4.5.2 Role of Market-Based Penalties 75\u003c\/p\u003e \u003cp\u003e4.6 Firm-Level Penalties for Corporate Financial Misconduct 75\u003c\/p\u003e \u003cp\u003e4.6.1 Direct Economic Costs Captured in Loss of Market Value 83\u003c\/p\u003e \u003cp\u003e4.6.2 Loss of Firm Reputation 83\u003c\/p\u003e \u003cp\u003e4.6.3 Spillover of Reputational Effect 84\u003c\/p\u003e \u003cp\u003e4.6.4 Governance Risk and Insurance Premiums 85\u003c\/p\u003e \u003cp\u003e4.6.5 Reduced Liquidity 85\u003c\/p\u003e \u003cp\u003e4.6.6 Access to Financing 85\u003c\/p\u003e \u003cp\u003e4.6.7 Reduced Innovation 86\u003c\/p\u003e \u003cp\u003e4.6.8 Mergers and Acquisitions 86\u003c\/p\u003e \u003cp\u003e4.7 Individual-Level Penalties for Corporate Financial Misconduct 87\u003c\/p\u003e \u003cp\u003e4.7.1 Executive and Director Turnover 87\u003c\/p\u003e \u003cp\u003e4.7.2 Impaired Career Progression 95\u003c\/p\u003e \u003cp\u003e4.7.3 Loss of Reputation 96\u003c\/p\u003e \u003cp\u003e4.7.4 Executive Compensation 97\u003c\/p\u003e \u003cp\u003e4.7.5 Strengthened Monitoring 97\u003c\/p\u003e \u003cp\u003e4.8 Causes, Risks, and Moderators of Financial Misconduct 98\u003c\/p\u003e \u003cp\u003e4.8.1 Fraud Incentives 98\u003c\/p\u003e \u003cp\u003e4.8.2 Risk Factors 113\u003c\/p\u003e \u003cp\u003e4.8.3 Public Enforcement: Regulatory and Judicial Stringency 115\u003c\/p\u003e \u003cp\u003e4.8.4 Public Enforcement: Detection and Surveillance 116\u003c\/p\u003e \u003cp\u003e4.8.5 Private Enforcement 117\u003c\/p\u003e \u003cp\u003e4.9 Other Non-Financial Misconduct 118\u003c\/p\u003e \u003cp\u003e4.10 Concluding Remarks 119\u003c\/p\u003e \u003cp\u003eReferences 120\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 5: Insider Trading and Market Manipulation 135\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eJonathan A. Batten, Igor Lončarski, and Peter G. Szilagyi\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e5.1 Introduction 135\u003c\/p\u003e \u003cp\u003e5.2 Regulatory Framework on Insider Trading and Market Manipulation 140\u003c\/p\u003e \u003cp\u003e5.3 Recent Examples of Market Manipulation and Insider Trading 145\u003c\/p\u003e \u003cp\u003e5.4 Conclusions 148\u003c\/p\u003e \u003cp\u003eReferences 149\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 6: Financial Fraud and Reputational Capital 153\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eJonathan M. Karpoff\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e6.1 Financial Frauds in the 2000s 154\u003c\/p\u003e \u003cp\u003e6.2 The Effects of Fraud Revelation on Firm Value and Reputational Capital 156\u003c\/p\u003e \u003cp\u003e6.2.1 Market Value Losses When Financial Misconduct is Revealed 156\u003c\/p\u003e \u003cp\u003e6.2.2 Spillover Effects 157\u003c\/p\u003e \u003cp\u003e6.2.3 Reputational Losses for Financial Misconduct 158\u003c\/p\u003e \u003cp\u003e6.2.4 Direct Measures of Lost Reputational Capital 159\u003c\/p\u003e \u003cp\u003e6.2.5 Do Misconduct Firms Always Lose Reputational Capital? 160\u003c\/p\u003e \u003cp\u003e6.2.6 Rebuilding Reputational Capital 161\u003c\/p\u003e \u003cp\u003e6.3 The Effects of Fraud Revelation on Shareholders and Managers 162\u003c\/p\u003e \u003cp\u003e6.3.1 Should Shareholders Pay? Do Managers Pay? 162\u003c\/p\u003e \u003cp\u003e6.3.2 Do Shareholders Pay Twice? 162\u003c\/p\u003e \u003cp\u003e6.3.3 Are Firm-Level Penalties Efficient? 163\u003c\/p\u003e \u003cp\u003e6.3.4 Consequences for Managers and Directors 163\u003c\/p\u003e \u003cp\u003e6.4 Why Do Managers Do It? Motives and Constraints 165\u003c\/p\u003e \u003cp\u003e6.4.1 Motives for Financial Misconduct 165\u003c\/p\u003e \u003cp\u003e6.4.2 Constraints on Financial Misconduct 167\u003c\/p\u003e \u003cp\u003e6.5 Proxies and Databases Used to Identify Samples of Financial Statement Misconduct 168\u003c\/p\u003e \u003cp\u003e6.6 Conclusion: Reputation, Enforcement, and Culture 170\u003c\/p\u003e \u003cp\u003eReferences 171\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart II How and Where Does Misconduct Occur? 179\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 7: Manipulative and Collusive Practices in FX Markets 181\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eAlexis Stenfors\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e7.1 Introduction 181\u003c\/p\u003e \u003cp\u003e7.2 Different Types of FX Orders 183\u003c\/p\u003e \u003cp\u003e7.3 The Unique FX Market Structure 184\u003c\/p\u003e \u003cp\u003e7.4 Examples of Manipulative and Collusive Practices in FX Markets 188\u003c\/p\u003e \u003cp\u003e7.4.1 Front Running 188\u003c\/p\u003e \u003cp\u003e7.4.2 Triggering Stop-Loss Orders 190\u003c\/p\u003e \u003cp\u003e7.4.3 ‘Banging the Close’ 192\u003c\/p\u003e \u003cp\u003e7.4.4 Collusion and Sharing of Confidential Information 193\u003c\/p\u003e \u003cp\u003e7.4.5 Spoofing 195\u003c\/p\u003e \u003cp\u003e7.4.6 Market Abuse via Electronic Trading Platforms 196\u003c\/p\u003e \u003cp\u003e7.5 The Reform Process 197\u003c\/p\u003e \u003cp\u003eReferences 199\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 8: Fraud and Manipulation within Cryptocurrency Markets 205\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eDavid Twomey and Andrew Mann\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e8.1 Introduction 206\u003c\/p\u003e \u003cp\u003e8.2 Why Do fraud and Manipulation Occur in Cryptocurrency Markets? 212\u003c\/p\u003e \u003cp\u003e8.2.1 Lack of Consistent Regulation 212\u003c\/p\u003e \u003cp\u003e8.2.2 Relative Anonymity 213\u003c\/p\u003e \u003cp\u003e8.2.3 Low Barriers to Entry 214\u003c\/p\u003e \u003cp\u003e8.2.4 Exchange Standards and Sophistication 214\u003c\/p\u003e \u003cp\u003e8.3 Pump and Dumps 215\u003c\/p\u003e \u003cp\u003e8.3.1 Case Studies 217\u003c\/p\u003e \u003cp\u003e8.4 Inflated Trading Volume 217\u003c\/p\u003e \u003cp\u003e8.4.1 Case Study: January 2017 and PBoC Involvement 219\u003c\/p\u003e \u003cp\u003e8.5 Exchange DDoS Attacks 220\u003c\/p\u003e \u003cp\u003e8.5.1 Case Study 223\u003c\/p\u003e \u003cp\u003e8.6 Hacks and Exploitations 224\u003c\/p\u003e \u003cp\u003e8.6.1 Exchange Hacks 224\u003c\/p\u003e \u003cp\u003e8.6.2 Smart Contract Exploits 229\u003c\/p\u003e \u003cp\u003e8.6.3 Protocol Exploitation 230\u003c\/p\u003e \u003cp\u003e8.7 Flash Crashes 230\u003c\/p\u003e \u003cp\u003e8.7.1 GDAX-ETH\/USD Flash Crash 234\u003c\/p\u003e \u003cp\u003e8.8 Order Book-Based Manipulations 235\u003c\/p\u003e \u003cp\u003e8.8.1 Quote Stuffing 236\u003c\/p\u003e \u003cp\u003e8.8.2 Order Spoofing 237\u003c\/p\u003e \u003cp\u003e8.9 Stablecoins and Tether 239\u003c\/p\u003e \u003cp\u003e8.9.1 Tether Historical Timeline 240\u003c\/p\u003e \u003cp\u003e8.9.2 Tether Controversy and Criticism 242\u003c\/p\u003e \u003cp\u003e8.9.3 Tether’s Significance in Cryptocurrency Global Markets 245\u003c\/p\u003e \u003cp\u003e8.10 Summary and Conclusions 245\u003c\/p\u003e \u003cp\u003eReferences 249\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 9: The Integrity of Closing Prices 251\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eRyan J. Davies\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e9.1 Why Closing Prices Matter 251\u003c\/p\u003e \u003cp\u003e9.2 Painting the Tape and Portfolio Pumping 252\u003c\/p\u003e \u003cp\u003e9.3 ‘Bang-the-Close’ Manipulation: The Response of Financial Intermediaries 255\u003c\/p\u003e \u003cp\u003e9.4 Stock Price Pinning on Option Expiration Dates 259\u003c\/p\u003e \u003cp\u003e9.5 Conclusion: Lessons for the Regulation and Design of Financial Markets 263\u003c\/p\u003e \u003cp\u003eReferences 269\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 10: A Trader’s Perspective on Market Abuse Regulations 275\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eSam Baker\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e10.1 Introduction 275\u003c\/p\u003e \u003cp\u003e10.2 Getting the Trading Edge 278\u003c\/p\u003e \u003cp\u003e10.3 A Typical Trader’s Market Window 281\u003c\/p\u003e \u003cp\u003e10.4 Wash Trades 282\u003c\/p\u003e \u003cp\u003e10.5 High Ticking\/Low Ticking – Momentum Ignition 284\u003c\/p\u003e \u003cp\u003e10.6 Spoofing 286\u003c\/p\u003e \u003cp\u003e10.7 Layering 290\u003c\/p\u003e \u003cp\u003e10.8 Smoking 292\u003c\/p\u003e \u003cp\u003e10.9 Case Study: Paul Rotter a.k.a. ‘The Flipper’ 295\u003c\/p\u003e \u003cp\u003e10.10 The Innocent and the Guilty 299\u003c\/p\u003e \u003cp\u003e10.11 What are Exchanges Doing to Prevent Market Abuse? 301\u003c\/p\u003e \u003cp\u003e10.11.1 CME Group 301\u003c\/p\u003e \u003cp\u003e10.11.2 ICE 302\u003c\/p\u003e \u003cp\u003e10.12 What are Trading Companies Doing to Prevent Abuse? 302\u003c\/p\u003e \u003cp\u003e10.13 Will There Be an End to Market Abuse? 303\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart III Who are These Scoundrels? 305\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 11: Misconduct in Banking: Governance and the Board of Directors 307\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eDuc Duy Nguyen, Jens Hagendorff, and Arman Eshraghi\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e11.1 Introduction 307\u003c\/p\u003e \u003cp\u003e11.2 Literature Review 311\u003c\/p\u003e \u003cp\u003e11.3 Research Design 312\u003c\/p\u003e \u003cp\u003e11.3.1 Data 312\u003c\/p\u003e \u003cp\u003e11.3.2 Empirical Design 313\u003c\/p\u003e \u003cp\u003e11.3.3 Variables 314\u003c\/p\u003e \u003cp\u003e11.4 Empirical Results 316\u003c\/p\u003e \u003cp\u003e11.4.1 Main Results 316\u003c\/p\u003e \u003cp\u003e11.4.2 Results for Different Classes of Enforcement Actions 320\u003c\/p\u003e \u003cp\u003e11.4.3 Does Better Board Quality Alleviate Shareholder Wealth Losses? 323\u003c\/p\u003e \u003cp\u003e11.5 Conclusion 323\u003c\/p\u003e \u003cp\u003eReferences 325\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 12: Misconduct and Fraud by Investment Managers 327\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eStephen G. Dimmock, Joseph D. Farizo, and William C. Gerken\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e12.1 Introduction 327\u003c\/p\u003e \u003cp\u003e12.2 Related Research 329\u003c\/p\u003e \u003cp\u003e12.3 The Investment Advisers Act of 1940 and Mandatory Disclosures 331\u003c\/p\u003e \u003cp\u003e12.4 Data 332\u003c\/p\u003e \u003cp\u003e12.4.1 Investment Fraud 332\u003c\/p\u003e \u003cp\u003e12.4.2 Form ADV Data and Variables 337\u003c\/p\u003e \u003cp\u003e12.5 Predicting Fraud and Misconduct 340\u003c\/p\u003e \u003cp\u003e12.5.1 Predicting Fraud by Investment Managers 340\u003c\/p\u003e \u003cp\u003e12.5.2 Interpreting the Predictive Content of the Models 345\u003c\/p\u003e \u003cp\u003e12.5.3 K-Fold Cross-Validation Tests 346\u003c\/p\u003e \u003cp\u003e12.6 Predicting the Initiation vs. the Continuance of Fraud 347\u003c\/p\u003e \u003cp\u003e12.7 Firm-Wide Fraud vs. Fraud by a Rogue Employee 349\u003c\/p\u003e \u003cp\u003e12.8 Out-of-Sample Prediction and Model Stability 351\u003c\/p\u003e \u003cp\u003e12.9 Policy Implications and Conclusions 352\u003c\/p\u003e \u003cp\u003eReferences 355\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 13: Options Backdating and Shareholders 359\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eJohan Sulaeman and Gennaro Bernile\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e13.1 Introduction 359\u003c\/p\u003e \u003cp\u003e13.2 Stock Return Patterns around Option Grants 360\u003c\/p\u003e \u003cp\u003e13.3 The Backdating Practice 361\u003c\/p\u003e \u003cp\u003e13.4 Media Coverage, Restatement, and Investigation 362\u003c\/p\u003e \u003cp\u003e13.5 Stock Market Reaction to Public Revelations of Backdating 363\u003c\/p\u003e \u003cp\u003e13.6 Investor Reaction to (and Anticipation of) Public Revelations 364\u003c\/p\u003e \u003cp\u003e13.7 Other Types of Misbehaviour Related to Option Grants 365\u003c\/p\u003e \u003cp\u003e13.7.1 Forward Dating 365\u003c\/p\u003e \u003cp\u003e13.7.2 Selective Disclosure 366\u003c\/p\u003e \u003cp\u003e13.7.3 Option Exercise Backdating 366\u003c\/p\u003e \u003cp\u003e13.7.4 Independent Director Backdating 366\u003c\/p\u003e \u003cp\u003e13.8 Connections with Questionable Practices by Corporate Executives and Other Agents 366\u003c\/p\u003e \u003cp\u003e13.9 Conclusion 367\u003c\/p\u003e \u003cp\u003eReferences 368\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 14: The Strategic Behaviour of Underwriters in Valuing IPOs 371\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eStefano Paleari, Andrea Signori, and Silvio Vismara\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e14.1 Valuing IPOs 371\u003c\/p\u003e \u003cp\u003e14.2 The Underwriter’s Incentives in the Valuation of IPOs 373\u003c\/p\u003e \u003cp\u003e14.3 Literature Review 374\u003c\/p\u003e \u003cp\u003e14.4 Sample, Data, and Methodology 376\u003c\/p\u003e \u003cp\u003e14.4.1 Sample and Data 376\u003c\/p\u003e \u003cp\u003e14.4.2 Alternative Selection Criteria of Comparable Firms 380\u003c\/p\u003e \u003cp\u003e14.4.3 Valuation Bias and IPO Premium 380\u003c\/p\u003e \u003cp\u003e14.5 Results 381\u003c\/p\u003e \u003cp\u003e14.5.1 Algorithmic Selections 381\u003c\/p\u003e \u003cp\u003e14.5.2 Affiliated and Unaffiliated Analysts 386\u003c\/p\u003e \u003cp\u003e14.5.3 Underwriters’ Selection of Comparable Firms Pre- vs. Post-IPO 390\u003c\/p\u003e \u003cp\u003e14.5.4 Pre- vs. Post-IPO Selections and Industry Effects 394\u003c\/p\u003e \u003cp\u003e14.6 Conclusions 396\u003c\/p\u003e \u003cp\u003eReferences 397\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 15: Governance of Financial Services Outsourcing: Managing Misconduct and Third-Party Risks 399\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eJoseph A. McCahery and F. Alexander de Roode\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e15.1 Introduction 399\u003c\/p\u003e \u003cp\u003e15.2 The Four Components in Outsourcing 402\u003c\/p\u003e \u003cp\u003e15.2.1 Efficient Outsourcing 402\u003c\/p\u003e \u003cp\u003e15.2.2 The Four-Factor Governance Model 404\u003c\/p\u003e \u003cp\u003e15.2.3 Misconduct in Outsourcing and the Ability of Financial Institutions to Monitor 407\u003c\/p\u003e \u003cp\u003e15.3 The Interaction between Contracting and Monitoring 408\u003c\/p\u003e \u003cp\u003e15.3.1 Characterization of Financial Institutions 409\u003c\/p\u003e \u003cp\u003e15.3.2 Risks in Outsourcing Services 412\u003c\/p\u003e \u003cp\u003e15.4 Governance Mechanisms to Detect Misconduct in Financial Outsourcing 413\u003c\/p\u003e \u003cp\u003e15.4.1 Screening and Detection 414\u003c\/p\u003e \u003cp\u003e15.5 Conclusion 416\u003c\/p\u003e \u003cp\u003eReferences 417\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart IV Detection and Surveillance of Financial Misconduct 423\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 16: Identifying Security Market Manipulation 425\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eMike Aitken, Ann Leduc, and Shan Ji\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e16.1 Introduction 425\u003c\/p\u003e \u003cp\u003e16.2 Background Legislation 427\u003c\/p\u003e \u003cp\u003e16.2.1 Australia 427\u003c\/p\u003e \u003cp\u003e16.2.2 UK 428\u003c\/p\u003e \u003cp\u003e16.2.3 Hong Kong 428\u003c\/p\u003e \u003cp\u003e16.2.4 Canada 429\u003c\/p\u003e \u003cp\u003e16.2.5 Singapore 430\u003c\/p\u003e \u003cp\u003e16.2.6 Malaysia 430\u003c\/p\u003e \u003cp\u003e16.2.7 New Zealand 431\u003c\/p\u003e \u003cp\u003e16.3 Attributes of Manipulation 431\u003c\/p\u003e \u003cp\u003e16.3.1 How Traders Minimize the Resources Needed for Manipulative Trading 432\u003c\/p\u003e \u003cp\u003e16.3.2 Difficulties in Determining Whether Trading Behaviour is Manipulative 433\u003c\/p\u003e \u003cp\u003e16.3.3 Surveillance Systems 434\u003c\/p\u003e \u003cp\u003e16.4 Detection Algorithms 436\u003c\/p\u003e \u003cp\u003e16.5 Conclusion 439\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 17: The Analytics of Financial Market Misconduct 441\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eAi Deng and Priyank Gandhi\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e17.1 Introduction 442\u003c\/p\u003e \u003cp\u003e17.2 Financial Economic Analysis 446\u003c\/p\u003e \u003cp\u003e17.2.1 Benchmarking to Historical or Past Data 447\u003c\/p\u003e \u003cp\u003e17.2.2 Benchmarking to Alternate Proxies 451\u003c\/p\u003e \u003cp\u003e17.2.3 Benchmarking to a Model 454\u003c\/p\u003e \u003cp\u003e17.3 Quantitative Techniques 456\u003c\/p\u003e \u003cp\u003e17.3.1 The Principles of Fraud Detection 457\u003c\/p\u003e \u003cp\u003e17.3.2 Popular Supervised Learning Techniques for Fraud Detection 458\u003c\/p\u003e \u003cp\u003e17.3.3 Popular Unsupervised Learning Techniques for Fraud Detection 460\u003c\/p\u003e \u003cp\u003e17.3.4 Dynamic Misconduct Detection 462\u003c\/p\u003e \u003cp\u003e17.4 Conclusion 464\u003c\/p\u003e \u003cp\u003eReferences 466\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 18: Benford’s Law and Its Application to Detecting Financial Fraud and Manipulation 473\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eChristina Bannier, Corinna Ewelt-Knauer, Johannes Lips, and Peter Winker\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e18.1 Introduction 474\u003c\/p\u003e \u003cp\u003e18.2 Benford’s Law and Generalizations 476\u003c\/p\u003e \u003cp\u003e18.2.1 The Basic Principle of Benford’s Law 476\u003c\/p\u003e \u003cp\u003e18.2.2 Illustration of Benford’s Law 477\u003c\/p\u003e \u003cp\u003e18.2.3 Testing for Conformity with Benford’s Law 478\u003c\/p\u003e \u003cp\u003e18.2.4 Considering Further Digits with Benford’s Law 480\u003c\/p\u003e \u003cp\u003e18.2.5 When Do Data Conform to Benford’s Law? 482\u003c\/p\u003e \u003cp\u003e18.2.6 Limitations of Using Benford’s Law for Identification of Manipulations 483\u003c\/p\u003e \u003cp\u003e18.2.7 Generalizations of Benford’s Law for Identification of Manipulations 484\u003c\/p\u003e \u003cp\u003e18.3 Usage of Benford’s Law for Detecting Fraud and Deviant Behaviour 485\u003c\/p\u003e \u003cp\u003e18.3.1 Forensic Accounting in the Context of Auditing, Internal Control Systems, and Taxation 486\u003c\/p\u003e \u003cp\u003e18.3.2 Finance 487\u003c\/p\u003e \u003cp\u003e18.3.3 Surveys and Research 490\u003c\/p\u003e \u003cp\u003e18.4 A Case Study: Benford’s Law and the LIBOR 491\u003c\/p\u003e \u003cp\u003e18.5 Policy Implications 498\u003c\/p\u003e \u003cp\u003e18.6 Summary, Limitations, and Outlook 498\u003c\/p\u003e \u003cp\u003eReferences 499\u003c\/p\u003e \u003cp\u003e18.A Appendix 504\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart V Regulation and Enforcement 505\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 19: The Enforcement of Financial Market Crimes in Canada and the United Kingdom 507\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eAnita Indira Anand\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e19.1 Introduction 507\u003c\/p\u003e \u003cp\u003e19.2 Existing Scholarship 508\u003c\/p\u003e \u003cp\u003e19.3 Comparative Analysis 512\u003c\/p\u003e \u003cp\u003e19.3.1 Canada 512\u003c\/p\u003e \u003cp\u003e19.3.2 The United Kingdom 513\u003c\/p\u003e \u003cp\u003e19.4 Reform 515\u003c\/p\u003e \u003cp\u003e19.4.1 Resource Allocation 515\u003c\/p\u003e \u003cp\u003e19.4.2 Principles-Based Regulation 516\u003c\/p\u003e \u003cp\u003e19.4.3 Targeted Regulatory Reforms 518\u003c\/p\u003e \u003cp\u003e19.5 Conclusion 520\u003c\/p\u003e \u003cp\u003eReferences 520\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 20: A Pyramid or a Labyrinth? Enforcement of Registrant Misconduct Requirements in Canada 527\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eMary Condon\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e20.1 Introduction 527\u003c\/p\u003e \u003cp\u003e20.2 Definitional and Institutional Quagmires 529\u003c\/p\u003e \u003cp\u003e20.3 The Compliance\/Enforcement Continuum 531\u003c\/p\u003e \u003cp\u003e20.4 Enforcement Options Available to Sanction Registrant Misconduct 533\u003c\/p\u003e \u003cp\u003e20.5 Empirical Information Available about Registrant Misconduct in Canada 535\u003c\/p\u003e \u003cp\u003e20.5.1 Criminal Enforcement 535\u003c\/p\u003e \u003cp\u003e20.5.2 CSA Non-Criminal Enforcement 536\u003c\/p\u003e \u003cp\u003e20.5.3 Director’s Decision Data in Ontario 537\u003c\/p\u003e \u003cp\u003e20.5.4 SRO Enforcement 538\u003c\/p\u003e \u003cp\u003e20.6 Analysis 538\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 21: Judicial Local Protectionism and Home Court Bias in Corporate Litigation 541\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eMichael Firth, Oliver M. Rui, and Wenfeng Wu\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e21.1 Introduction 542\u003c\/p\u003e \u003cp\u003e21.2 Institutional Background 544\u003c\/p\u003e \u003cp\u003e21.2.1 Decentralization and Local Protectionism 544\u003c\/p\u003e \u003cp\u003e21.2.2 Judicial Independence 545\u003c\/p\u003e \u003cp\u003e21.2.3 The Heterogeneity of the Legal Environment across Regions 548\u003c\/p\u003e \u003cp\u003e21.3 Empirical Evidence 548\u003c\/p\u003e \u003cp\u003e21.3.1 Sample 549\u003c\/p\u003e \u003cp\u003e21.3.2 Basic Statistics 550\u003c\/p\u003e \u003cp\u003e21.3.3 The Wealth Effect for Defendants and Plaintiffs around the Filing Announcements at Different Courts 556\u003c\/p\u003e \u003cp\u003e21.3.4 The Impact of Court Location on the Wealth Effect 560\u003c\/p\u003e \u003cp\u003e21.3.5 Regression Analysis of the Wealth Effects from a Filing Announcement 560\u003c\/p\u003e \u003cp\u003e21.3.6 Heckman Two-Step Analysis of Sample Selection Bias 567\u003c\/p\u003e \u003cp\u003e21.3.7 The Impact of Court Location on the Likelihood to Appeal 573\u003c\/p\u003e \u003cp\u003e21.3.8 Sensitivity Tests 576\u003c\/p\u003e \u003cp\u003e21.4 Conclusion 579\u003c\/p\u003e \u003cp\u003eReferences 580\u003c\/p\u003e \u003cp\u003eIndex 583\u003c\/p\u003e \u003cp\u003e\u003cb\u003eCAROL ALEXANDER,\u003c\/b\u003e Ph.D., is Professor of Finance at the University of Sussex, Visiting Professor at Peking University PHBS Business School in Oxford and Co-Editor of the \u003ci\u003eJournal of Banking and Finance\u003c\/i\u003e. She is the former Chair of the Board of the Professional Risk Manager’s International Association and she consults on model design for major exchanges, banks, and fund managers worldwide. She has edited more than a dozen books in finance and risk management and her sole-authored four-volume textbook on \u003ci\u003eMarket Risk Analysis\u003c\/i\u003e (Wiley, 2008) remains the definitive guide to the subject after more than 12 years in print.\u003c\/p\u003e \u003cp\u003e\u003cb\u003eDOUGLAS CUMMING\u003c\/b\u003e J.D., Ph.D., CFA, is the DeSantis Distinguished Professor of Finance and Entrepreneurship at the College of Business, Florida Atlantic University, and Visiting Professor of Finance at Birmingham Business School, University of Birmingham, and Royal Melbourne Institute of Technology. He has published 18 books and over 185 articles in leading journals such as the \u003ci\u003eAcademy of Management Journal, Journal of Financial Economics\u003c\/i\u003e, and \u003ci\u003eReview of Financial Studies\u003c\/i\u003e, which have been cited over 15,000 times. He is the Managing Editor-in-Chief of the \u003ci\u003eBritish Journal of Management and Journal of Corporate Finance\u003c\/i\u003e, and the Founding Editor-in-Chief of the \u003ci\u003eReview of Corporate Finance\u003c\/i\u003e.  \u003c\/p\u003e\u003cp\u003e\u003cb\u003eThe comprehensive resource for understanding fraud and corruption in the marketplace \u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eAccording to two recent studies, each year financial market misconduct and fraud affects about 15% of publicly listed companies and it can cost between 20% and 38% of the company’s value. \u003ci\u003eCorruption and Fraud in Financial Markets\u003c\/i\u003e offers a much-needed guide that examines the various types of market manipulation and financial fraud and describes the myriad factors that mitigate or exacerbate the occurrence of fraud and manipulation such as insider trading, price manipulation, volume manipulation, spoofing, false disclosure, improper broker-agency relationships and improper execution. It also reviews bribery, financial restatements, options backdating and other common types of accounting fraud and conflicts of interest, and explains the consequences of these actions in terms of penalties and their possible impact on the financial marketplace. \u003c\/p\u003e\u003cp\u003eComprehensive in scope, the book contains contributions from noted experts on the topic. They provide evidence for the presence of fraud in specific markets, including crypto-currencies, LIBOR and foreign exchange, and cite the lessons to be learned about the detection and enforcement of market manipulation and financial fraud.  \u003c\/p\u003e\u003cp\u003e\u003ci\u003eCorruption and Fraud in Financial Markets\u003c\/i\u003e provides a deeper understanding of all these issues to help prevent you and your company from falling victim to unethical practices.  \u003c\/p\u003e\u003cp\u003e\u003cb\u003ePRAISE FOR \u003ci\u003eCORRUPTION AND FRAUD IN FINANCIAL MARKETS\u003c\/i\u003e\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\"Financial market fraud and corruption are undoubtedly costly to investors in developed and developing countries around the world. In the ongoing fight to mitigate those costs, this book is a valuable resource – it provides deep insights and helpful tools for all pertinent stakeholders.\"\u003cbr\u003e\u003cb\u003e—John Archibald,\u003c\/b\u003e Principal, Investigation Counsel P.C., Toronto, Canada\u003c\/p\u003e \u003cp\u003e\"The best new research resource in 40 years for those concerned with transparency, compliance, and enforcement in financial markets due to fraud and corruption. Crypto, manipulation, non-disclosure, illegal trading and other evils to the market have been around for a long time. Now, finally, there is a comprehensive study to guide the good – lawyers, financial practitioners, policymakers, students, academics, and enforcement authorities.\"\u003cbr\u003e\u003cb\u003e—Paul Bates,\u003c\/b\u003e LL.M., Barrister, Canada and U.K., www.batesbarristers.com, Outer Temple Chambers, London U.K.\u003c\/p\u003e \u003cp\u003e\"This book offers many useful insights on corporate fraud and securities market manipulation. The chapters prepared by world leading academics and practitioners assess the determinants of fraud and manipulation, the associated costs, and the regulatory responses in different countries around the world. I believe it is a vital resource for academics, practitioners, and policymakers alike.\"\u003cbr\u003e\u003cb\u003e—Prof. Jeffrey G. MacIntosh,\u003c\/b\u003e Professor \u0026amp; Toronto Stock Exchange Chair in Capital Markets Law; Faculty of Law, University of Toronto\u003c\/p\u003e \u003cp\u003e\"This essential text covers the entire ground of financial market fraud and misbehaviour, including important related areas such as misleading financial reporting and bribery. It is a key resource for those working in financial markets, law, public policy, and academia.\"\u003cbr\u003e\u003cb\u003e—Bryce C. Tingle, \u003c\/b\u003eN. Murray Edwards Chair in Business Law, University of Calgary; Director - Financial Markets Regulation Programme, The School of Public Policy\u003c\/p\u003e \u003cp\u003e\"Growing evidence of high-level corruption in some of the most developed states, market turbulence and the role of vested interests in both contributing to the causes and benefitting from such crises, makes the study of fraud malpractice in financial markets ever more important. This collection is both timely and prescient, and advances our understanding around a broad range of salient issues.\"\u003cbr\u003e\u003cb\u003e—Prof. Geoffrey Wood,\u003c\/b\u003e DanCap Chair of Innovation and Head of DAN Management, Western University, Canada; Visiting Professor, Trinity College, Dublin\u003c\/p\u003e","brand":"Wiley","offers":[{"title":"Default Title","offer_id":47988995916005,"sku":"NP9781119421771","price":85.0,"currency_code":"USD","in_stock":false}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/1842\/7735\/files\/9781119421771.jpg?v=1761782361","url":"https:\/\/k12savings.com\/es\/products\/corruption-and-fraud-in-financial-markets-isbn-9781119421771","provider":"K12savings","version":"1.0","type":"link"}