Many studies examine the use of false news as a method of stock price manipulation. Empirical research shows, for example, that false news generates persistent abnormal returns and affects trading volume. Studies also show that institutions often know about news before it breaks. However, the role institutions play in false news events is still unclear. To understand that role, we track institutional order flow around the release of false news in the Chinese stock market. We find that institutions seem to have early information about false news releases. Their prerelease order flows predict false news sentiments and market reactions. We further find that the early information may come from the media outlets reporting the false news. We also find evidence that institutions reverse their positions several days after the denial releases rather than when the news breaks. In turn, our evidence shows which trading patterns could bring more potential profits than reversing right on the news breaks. Our results provide unique insights into price movements and institutional reactions on false news, as well as evidence regarding regulating institutions, media platforms, and information manipulation in the stock market.

This study investigates whether and to what extent bank control over firms by their representation on boards of directors and by equity holdings through trust business may affect corporate environmental responsibility. Using a large sample of listed firms in the United States from 2004 to 2016, we find that banker directors with equity affiliation improve firms’ environmental performance scores and such impact is associated with affiliated bank’s shareholdings, investment horizon, and environmental orientation. Additionally, we document that the effects of bank control on firm’s environmental investments is stronger for firms with more short-term institutional investors but weaker for firms with more analyst coverage. Moreover, we find that when firms are financially constrained, banker directors reduce environmental investments. Finally, product-market competition matters for a firm’s environmental strategies as the relation of bank control and environmental investments is more profound under conditions of greater industry competition.