False Bankruptcy Report Shows Risks Of Online News
Professor Joseph A. Grundfest is quoted in a Marketwatch story about the dramatic plunge of United Airlines' stock due to false bankruptcy rumors, and the impact of the Internet on companies and financial markets:
Joseph Grundfest, a professor of law and business at Stanford Law School, said the episode shows that, in today's market environment, high-speed information cuts both ways.
"What you have here is a mistake that caused a very rapid decline in the stock price, but the market also recovered from that decline once the truth was put out within a period of an hour or two or less," he said. "In a world where news travels more slowly, it could take longer to fix the mistake and more people would be affected."
"I can't recall a situation as dramatic," Grundfest, the Stanford law professor, said.