Stock markets are not what we think they are: the key roles of cross-ownership and corporate treasury stock

We describe and document three mechanisms by which corporations can influence or even control stock prices. (i) Parent and holding companies wield control over other publicly traded companies. (ii) Through clever management of treasury stock based on buyback programs and stock issuance, stock price fluctuations can be amplified or curbed. (iii) Finally, history shows a close interdependance between the level of stock prices on the one hand and merger and acquisition activity on the other hand. This perspective in which Boards of Directors of major companies shepherd the market offers a natural interpretation of the so-called "herd behavior" observed in stock markets. The traditional view holds that by driving profit expectations, corporations have an indirect role in shaping the market. In this paper, we suggest that over the last decades they became more and more the direct moving force of stock markets.Comment: 9 pages, 3 figures, 1 tabl

Macro-players in stock markets

It is usually assumed that stock prices reflect a balance between large numbers of small individual sellers and buyers. However, over the past fifty years mutual funds and other institutional shareholders have assumed an ever increasing part of stock transactions: their assets, as a percentage of GDP, have been multiplied by more than one hundred. The paper presents evidence which shows that reactions to major shocks are often dominated by a small number of institutional players. Most often the market gets a wrong perception and inadequate understanding of such events because the relevant information (e.g. the fact that one mutual fund has sold several million shares) only becomes available weeks or months after the event, through reports to the Securities and Exchange Commission (SEC). Our observations suggest that there is a radical difference between small ($< 0.5$) day-to-day price variations which may be due to the interplay of many agents and large ($>5$) price changes which, on the contrary, may be caused by massive sales (or purchases) by a few players. This suggests that the mechanisms which account for large returns are markedly different from those ruling small returns.Comment: 17 pages, 7 figures, 3 table

Suicide: the key role of short range ties

The paper explores the connection between short-range social ties (i.e. links with close relatives) and the occurrence of suicide. The objective is to discriminate between a model based on social ties and a model based on psychological traumas. Our methodological strategy is to focus on instances characterized by the severance of some social ties. We consider several situations of this kind. (i) Prisoners in the first days after their incarceration. (ii) Prisoners in solitary confinement. (iii) Prisoners who are transferred from one prison to another. (iv) Prisoners in closed versus open prisons. (v) Prisoners in the weeks following their release. (vi) Immigrants in the years following their relocation. (vii) Unmarried versus married people. Furthermore, in order to test the impact of major shocks we consider the responses in terms of suicides to the following shocks. (i) The attack of September 11, 2001 in Manhattan. (ii) The Korean War. (iii) The two world wars. (iv) The Great Depression in the United States. (v) The hyperinflation episode of 1923 in Germany. Major global traumatic shocks such as 9/11 or wars have no influence on suicide rates once changing environment conditions have been controlled for. Overall, it turns out that the observations have a natural interpretation in terms of short-range ties. In contrast, the trauma model seems unable to adequately account for many observations.Comment: 19 pages, 7 graphics, 4 table