The Information Needs of the Capital Markets: The Crossover Between Market Manipulation and Bloggers Spreading of Information and/or Investment Recommendations

Stephanie Dogouho Tegam Mortensen & Oliver von Wowern Fanøe

Student thesis: Master thesis


In recent years bloggers have become more and more limited in commenting on stocks in the capital markets. Bloggers who act privately orsemi-professionally find it difficult to figure out how they can comment on stocks. The current legislation on market manipulation is not very transparent, and the efficiency of the capital markets suffer. This thesis investigates if bloggers can spread information and/or investment recommendations about the capital markets without causing problems for themselves. Initially, the thesis will analyze whether the term “blogger” can be equated with journalists, since journalists have more lenient rules applied to them in with regards to spreading information about the capital markets. We further analyze the restrictiveness and complexity of the Market Abuse Regulation (MAR) and we argue that it is currently too restrictive and complex for bloggers to navigate in. The effects of the lack of transparency in the legislation is analyzed in the economic chapter of the thesis. We argue that when bloggers spread information about the capital markets, it affects illiquid stocks to a higher degree than liquid stocks. In accordance with the hypothesis of efficient capital markets, we argue that the current efficiency of the capital markets has room for improvement. We further analyze the issues by using game theory. This approach illustrates how the Nash equilibrium, in accordance with the given prerequisites, reflects a situation in which the legislation is transparent, and the bloggers are actively spreading information about illiquid stocks. We conclude, that it would be beneficial for the Danish legislators to transition the current, complex legislation to a more transparent legislation. The effect of this would be an increase in the trading of illiquid stocks because bloggers would be increasingly likely to spread such information. The increase in trade with illiquid stocks would increase the societal benefits in terms of growth.

EducationsMSc in Commercial Law, (Graduate Programme) Final Thesis
Publication date2019
Number of pages89
SupervisorsPeer Schaumburg-Müller