Information Barriers and Crash Caused by Fund Competition
School of Management, Xi’an Polytechnic University, Xi’an 710048, China
| Abstract: | With the continuous improvement of per capita wealth level, people's willingness to participate in financial investment continues to raise, funds as one of the important investment tools, favored by the public, resulting in the increasing number and scale of securities investment funds, the collapse of fund net value will have a huge impact on investors and financial markets. The increasing number of fund institutions makes the relationship between them more complex and the competition more intense, forming a complex institutional investor relationship network, so from the perspective of the competitive relationship network, what impact will the fund relationship network have on the net value of the fund? What is the mechanism of influence in between? Based on the stock market and fund market data from 2012 to 2020, this paper constructs a fund competition network from the perspective of social network relationship, analyzes the relationship between the structural variables of the competitive network and the risk of collapse of fund net value through multiple regression, and discusses the impact of fund information competition relationship on the risk of net value collapse. The results show that: (1) the competition intensity of the fund will increase the risk of its own net value plummeting; (2) There is a positive U-shaped relationship between the degree of proximity to centrality and the risk of a collapse in the net value of the fund, and this effect will dominate in a highly competitive environment; (3) There is an inverted U-shaped relationship between intermediary centrality and the risk of a collapse in the fund's net value, and this effect will dominate in a moderately competitive environment. The results show that the information barrier caused by competition between funds can significantly increase the risk of a fund's net value plummeting. The results of this study are not only conducive to enhancing investors' risk awareness when investing in funds, but also provide a reference for regulators to understand the relationship between fund competition and the collapse of their net value. |
| Keywords: | Securities Investment Funds; Information Network; Crash |
| DOI: | 10.57237/j.wjeb.2022.01.005 |
View:
Downloads:
Received: 29 September 2022
Accepted: 6 January 2023
Published Online: 12 January 2023
References
| [1] | HOU Weixiang, YU Jin. Fund Asset Network, Investment Capability and Risk of Fund Net Value Plunge Based on the Research of Equity Funds [J]. Journal of International Finance, 2018 (4): 86-96. |
| [2] | XU Lin, ZHANG Xiaohua, QIAN Chongxiu. Fund Manager Social Network, Performance Ranking and Risk of Net Value Plunge [J]. Journal of Central University of Finance and Economics, 2020 (11): 28-44. |
| [3] | Luo Ronghua, Tian Zhenglei. Fund Network, Competition Barrier and Stock Information Environment [J]. China Industrial Economics, 2020 (3): 137-154. |
| [4] | CHEN Shenglan, LI Jing. Can fund networks improve investment performance? Journal of Financial Research, 2021 (6): 19. |
| [5] | GUO Baiying, LI Jin. Information Sharing of Institutional Investors and Stock Price Crash Risk——Based on Analysis of Social Relationship Network [J]. Economic Management, 2019, 41 (07): 173-191. |
| [6] | SHEN Yu, ZHAO Jingmei, HE Xin, et al. Alumni Network, Fund Investment Performance and "Small Circle" Effect [J]. Quarterly Journal of Economics, 2016, 01 (59): 407-432. |
| [7] | Moreno D, Rodriguez R, Zambrana R. Management sub-advising in the mutual fund industry [J]. Journal of Financial Economics, 2018, 127 (3): 567-587. |
| [8] | Bregnard N, Salva C. Pension Fund Board Governance and Asset Allocation: Evidence from Switzerland [J]. Social Science Electronic Publishing, 2019. |
| [9] | Crawford S S, Gray W H, Kern A F. Why Do Fund Managers Identify and Share Profitable Ideas? [J]. Journal of Financial and Quantitative Analysis, 2017, 52 (5): 1-24. |
| [10] | Ryu W, Mccann B T, Reuer J J. Geographic Co-location Of Partners And Rivals: Implications For The Design Of R&D Alliances [J]. Academy of Management Journal, 2018, 61 (3): 945-965. |
| [11] | B R S. Structure Holes: The social structure of competition [M]. Boston: Harvard University Press, 1992. |
| [12] | LIU Jun. Holistic network analysis [M]. Shanghai: Gezhi Publishing House, 2014. |
| [13] | Bhide A. The hidden costs of stock market liquidity [J]. Journal of Financial Economics, 1993, 34 (1): 31-51. |
| [14] | Yu, Tieying, et al. Competing globally, allying locally: Alliances between global rivals and host-country factors [J]. Journal of International Business Studies, 2013, 44 (2): 117-137. |
| [15] | Hoberg G, Kumar N, Prabhala N. Mutual Fund Competition, Managerial Skill, and Alpha Persistence [J]. Review of Financial Studies, 2018, 31 (5): 1896-1929. |
Join the Editorial Board
We invite active, qualified and high profile scientists and researchers to join as Editorial Board Members.
Join UsBecome a Reviewer
Scholars with a strong interest in reviewing are invited to join the reviewer panel to ensure the quality of the research to be published.
Join Us