Capital market offenses in Malaysia

Abstract

PurposeThe purpose of this study is to review and evaluate the salient features of stock market manipulation in Malaysia. The research questions used are: Who was involved? How it happened? What were the consequences?Design/methodology/approachThis study has been conducted using content and thematic analysis. This study includes multiple sources of information to help establish the stylized facts and it uses cases that have been prosecuted in Malaysia for 2005-2015.FindingsThis study presents arguments and empirical data supporting the view that the stock market manipulation was conducted by those in a privileged position and with access to information. Ethical failure, involving greed, self-interest, dishonesty and a preoccupation with a quick profit, could explain why stock market manipulation happened. Manipulation harms legitimate investors, as share prices and earnings of companies are affected.Practical implicationsA better understanding about the prevalence, characteristics and consequences of the market manipulation problems will be useful for stakeholders, investors and policymakers in the financial industry for promoting and maintaining a fair, efficient and transparent stock market.Originality/valueThe originality of this paper lies in examining and presenting interpretations based on contemporary phenomenon within the real-life context of Malaysia. There is little study or literature that focuses on Malaysia, especially in examining stock market manipulation by integrating finance and management perspectives to form a comprehensive understanding of the issue.