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Fund Network Relationship Strength and Companies' Non-efficiency Investment

【Authors】
QI Haodong, QIAO Lin & CAO Wei
【WorkUnit】
QI Haodong, QIAO Lin (Shandong University of Finance and Economics, 250014)CAO Wei (Nanjing University,210093)
【Abstract】

This paper takes the public funds investing in Chinese A-shares listed companies from 2012 to 2017 as a sample, to study the impact of the fund network strength on the companies' non-efficiency investment. The results show that the stronger the fund network relationship is, the more likely it is to lead to non-efficiency investment of listed companies, especially in the sample group of short-term shareholding funds. Further study reveals that: stock mispricing plays an mediating role between the fund network relationship strength and companies' non-efficiency investment, that is, the strong fund network relationship intensifies the mispricing in the stock market and leads to non-efficiency investment; the improvement of corporate internal governance mechanism and information transparency can alleviate the adverse impact of strong fund network relationship on the companies' non-efficiency investment. To a certain extent, the findings of this paper extend the application of social network theory in the studies of funds' information effect, and the relevant research conclusions can provide useful references for regulators to guide the investment behavior of the funds.
    
JEL:G32, D21

【KeyWords】
Funds' Information Effect, Fund Network Relationship Strength, Information Transmission, Non-Efficiency Investment