Price Manipulation by Dissemination of Rumors: Evidence from the Indonesian Stock Market

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  • Dewa Gede Wirama Universitas Udayana
  • I Gusti Bagus Wiksuana Universitas Udayana
  • Zuraidah Mohd-Sanusi Universiti Teknologi MARA
  • Soheil Kazemian Universiti Teknologi MARA


This study examines stock market reactions to the publication of rumors in Indonesia market. Using 672 market rumors published in the electronic version of the Investor Daily Indonesia newspaper for the period starting from 3 August 2007 to 31 December 2008, this research shows that market rumors were intentionally published by sellers to attract buyers. They are a part of a manipulation scheme that is intended to enable the manipulator to sell at higher prices stocks that they previously accumulated at lower prices. The findings of this research indicate that the stock market is not fully efficient as prices could be manipulated by rumors. Consequently, the existence of market rumors should be considered in timing the buy and sell decision. Regulators might also want to put into effect stronger regulation against spreading false information to protect the small and usually less informed investors.Keywords: rumor, market manipulation, abnormal return, investment decision, regulation.JEL Classifications: GO1, G14, G15


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Author Biographies

Dewa Gede Wirama, Universitas Udayana

Lecturer at the Accounting Department, Universitas Udayana

I Gusti Bagus Wiksuana, Universitas Udayana

Lecturer at the Management Department of Universitas Udayana

Zuraidah Mohd-Sanusi, Universiti Teknologi MARA

Research FellowAccounting Research Institute

Soheil Kazemian, Universiti Teknologi MARA

Postdoctoral FellowAccounting Research Institution (ARI)Universiti Teknologi MARA




How to Cite

Wirama, D. G., Wiksuana, I. G. B., Mohd-Sanusi, Z., & Kazemian, S. (2017). Price Manipulation by Dissemination of Rumors: Evidence from the Indonesian Stock Market. International Journal of Economics and Financial Issues, 7(1), 429–434. Retrieved from