IDEAS home Printed from https://ideas.repec.org/a/eee/ecolet/v248y2025ics0165176525000837.html
   My bibliography  Save this article

Do institutional investor cliques prefer supply chain transparency?

Author

Listed:
  • Li, Shi
  • Li, Meng
  • Ma, Leyao
  • Ding, Jing

Abstract

We examine the impact of supply chain transparency (SCT) on institutional investor cliques’ ownership. We find that institutional investors in cliques prefer firms with lower SCT, which reinforces their information advantage. The preference is more pronounced when the social distance among clique members is closer, aligning with the explanation that institutional investors acquire private information through social networks, leading to coordinated actions. Further, this preference is strengthened when a firm has greater market power or profitability. These results indicate that the non-financial information contained within undisclosed supply chains affects institutional investors' decision-making. We provide a fresh perspective and evidence on the formation of institutional investor cliques.

Suggested Citation

  • Li, Shi & Li, Meng & Ma, Leyao & Ding, Jing, 2025. "Do institutional investor cliques prefer supply chain transparency?," Economics Letters, Elsevier, vol. 248(C).
    • Handle: RePEc:eee:ecolet:v:248:y:2025:i:c:s0165176525000837
    DOI: 10.1016/j.econlet.2025.112246
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165176525000837
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econlet.2025.112246?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Philippe Aghion & John Van Reenen & Luigi Zingales, 2013. "Innovation and Institutional Ownership," American Economic Review, American Economic Association, vol. 103(1), pages 277-304, February.
    2. Lauren Cohen & Andrea Frazzini & Christopher Malloy, 2008. "The Small World of Investing: Board Connections and Mutual Fund Returns," Journal of Political Economy, University of Chicago Press, vol. 116(5), pages 951-979, October.
    3. Brian J. Bushee & Theodore H. Goodman, 2007. "Which Institutional Investors Trade Based on Private Information About Earnings and Returns?," Journal of Accounting Research, Wiley Blackwell, vol. 45(2), pages 289-321, May.
    4. Qiming Zhong & Qinghua Song & Chien-Chiang Lee, 2024. "Managing crash risks through supply chain transparency: evidence from China," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 10(1), pages 1-31, December.
    5. Ding, Jing & Fang, Libing & Chen, Shi, 2020. "Mitigating free riding in social networks: The impact of underestimating others’ ability in financial market," International Review of Economics & Finance, Elsevier, vol. 70(C), pages 582-599.
    6. ManMohan S. Sodhi & Christopher S. Tang, 2019. "Research Opportunities in Supply Chain Transparency," Production and Operations Management, Production and Operations Management Society, vol. 28(12), pages 2946-2959, December.
    7. Mugerman, Yevgeny & Steinberg, Nadav & Wiener, Zvi, 2022. "The exclamation mark of Cain: Risk salience and mutual fund flows," Journal of Banking & Finance, Elsevier, vol. 134(C).
    8. Sha, Yezhou & Wu, Xi, 2024. "Downward pressure, investment style and performance persistence of institutional investors," International Review of Economics & Finance, Elsevier, vol. 95(C).
    9. Tim Kraft & León Valdés & Yanchong Zheng, 2018. "Supply Chain Visibility and Social Responsibility: Investigating Consumers’ Behaviors and Motives," Manufacturing & Service Operations Management, INFORMS, vol. 20(4), pages 617-636, October.
    10. Kilincarslan, Erhan & Ozdemir, Ozgur, 2018. "Institutional investment horizon and dividend policy: An empirical study of UK firms," Finance Research Letters, Elsevier, vol. 24(C), pages 291-300.
    11. Fan, Yaoyao & Ly, Kim Cuong & Jiang, Yuxiang, 2023. "Institutional investor networks and firm innovation: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 89(C).
    12. Guo, Xueting & Ma, Weichun & Liu, Xiaotong & Mo, Yan, 2023. "Fund investor cliques and flow sensitivity—evidence from China," Finance Research Letters, Elsevier, vol. 58(PB).
    13. Wang, Yibo & Liu, Bai & Chan, Hing Kai & Zhang, Tiantian, 2023. "Who pays buyers for not disclosing supplier lists? Unlocking the relationship between supply chain transparency and trade credit," Journal of Business Research, Elsevier, vol. 155(PB).
    14. Crane, Alan D. & Koch, Andrew & Michenaud, Sébastien, 2019. "Institutional investor cliques and governance," Journal of Financial Economics, Elsevier, vol. 133(1), pages 175-197.
    15. Veronika K. Pool & Noah Stoffman & Scott E. Yonker, 2015. "The People in Your Neighborhood: Social Interactions and Mutual Fund Portfolios," Journal of Finance, American Finance Association, vol. 70(6), pages 2679-2732, December.
    16. Huang, Wen & Wu, Ying & Deng, Li, 2021. "Does banking competition stimulate regional innovation? Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 70(C).
    17. Chung, San-Lin & Liu, Wenchien & Liu, Wen-Rang & Tseng, Kevin, 2018. "Investor network: Implications for information diffusion and asset prices," Pacific-Basin Finance Journal, Elsevier, vol. 48(C), pages 186-209.
    18. Tsai, Shih-Chuan, 2013. "Investors' information advantage and order choices in an order-driven market," Pacific-Basin Finance Journal, Elsevier, vol. 21(1), pages 932-951.
    19. Harrison Hong & Jeffrey D. Kubik & Jeremy C. Stein, 2005. "Thy Neighbor's Portfolio: Word‐of‐Mouth Effects in the Holdings and Trades of Money Managers," Journal of Finance, American Finance Association, vol. 60(6), pages 2801-2824, December.
    20. Gong, Xiao-Li & Liu, Jia, 2023. "Institutional investor information network, analyst forecasting and stock price crash risk," Research in International Business and Finance, Elsevier, vol. 65(C).
    21. Bing Han & Liyan Yang, 2013. "Social Networks, Information Acquisition, and Asset Prices," Management Science, INFORMS, vol. 59(6), pages 1444-1457, June.
    22. Nofsinger, John R. & Sulaeman, Johan & Varma, Abhishek, 2019. "Institutional investors and corporate social responsibility," Journal of Corporate Finance, Elsevier, vol. 58(C), pages 700-725.
    23. Bazrafshan, Ebrahim, 2023. "The role of ESG ranking in retail and institutional investors' attention and trading behavior," Finance Research Letters, Elsevier, vol. 58(PC).
    24. Quanxi Liang & Jiangshan Liao & Leng Ling, 2022. "Social interactions and mutual fund portfolios: the role of alumni networks in China," China Finance Review International, Emerald Group Publishing Limited, vol. 12(3), pages 433-450, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ge, Yiyun & Zhu, Hanbin, 2025. "Fund social network and abnormal positive tone in MD&A disclosures," International Review of Economics & Finance, Elsevier, vol. 98(C).
    2. Gong, Xiao-Li & Liu, Jia, 2023. "Institutional investor information network, analyst forecasting and stock price crash risk," Research in International Business and Finance, Elsevier, vol. 65(C).
    3. Xiang, Youtao & Borjigin, Sumuya, 2025. "Hedge funds network and stock price crash risk," The North American Journal of Economics and Finance, Elsevier, vol. 75(PA).
    4. Xiaoran Huang & Zheng Qiao & Lei Zhang, 2021. "The real effects of institutional spatial concentration," Financial Management, Financial Management Association International, vol. 50(4), pages 1113-1167, December.
    5. Guo, Xiaoping & Fan, Ningyuan & Liu, Zhenchun & Wang, Jianwei, 2024. "Macro topology structure and evolution of Chinese Public Funds’ Co-holding Network," The North American Journal of Economics and Finance, Elsevier, vol. 74(C).
    6. Theresa Kuchler & Yan Li & Lin Peng & Johannes Stroebel & Dexin Zhou, 2022. "Social Proximity to Capital: Implications for Investors and Firms," The Review of Financial Studies, Society for Financial Studies, vol. 35(6), pages 2743-2789.
    7. Yi, Li & Xiao, Li & Liao, Yinkai, 2024. "Network centrality, style drift, and mutual fund performance," Research in International Business and Finance, Elsevier, vol. 70(PA).
    8. Cujean, Julien, 2020. "Idea sharing and the performance of mutual funds," Journal of Financial Economics, Elsevier, vol. 135(1), pages 88-119.
    9. Sudipta Majumdar & Sayantan Kundu & Sankalp Bose & Abhijeet Chandra, 2024. "Network Nexus: Exploring the Impact of Alumni Connections of Managers on Mutual Fund Performance in India," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 31(4), pages 889-923, December.
    10. Genc, Egemen & Shirley, Sara E. & Stark, Jeffrey R. & Tran, Hai, 2023. "Finding information in obvious places: Work connections and mutual fund investment ideas," Journal of Financial Markets, Elsevier, vol. 63(C).
    11. Li, Jie & Zhou, Zhong-Qiang & Zhang, Yongjie & Xiong, Xiong, 2023. "Information interaction among institutional investors and stock price crash risk based on multiplex networks," International Review of Financial Analysis, Elsevier, vol. 89(C).
    12. Lin, Shu & Tian, Shu & Zheng, Lu, 2022. "Friend or foe: On a common shareholder relationship between mutual funds and public companies," Journal of Financial Markets, Elsevier, vol. 58(C).
    13. Xiaoping Guo & Gang An & Jiao Han & Zhenjia Wang, 2024. "How Can Fund Leaders Utilize Organizational Networks to Enhance Organizational Sustainable Performance Using the Funds’ Co-Holding Network as a Tool," SAGE Open, , vol. 14(2), pages 21582440241, May.
    14. Chen, Xiao & Chong, Zhaohui & Giudici, Paolo & Huang, Bihong, 2022. "Network centrality effects in peer to peer lending," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 600(C).
    15. Lou, Youcheng & Yang, Yaqing, 2023. "Information linkages in a financial market with imperfect competition," Journal of Economic Dynamics and Control, Elsevier, vol. 150(C).
    16. Li, Jie & Zhang, Yongjie & Wang, Lidan, 2021. "Information transmission between large shareholders and stock volatility," The North American Journal of Economics and Finance, Elsevier, vol. 58(C).
    17. Xiaoying Zhai & Huiping Ma & Yongmin Zhang & Peijun Wang & Moau Yong Toh, 2024. "Institutional investor network and idiosyncratic volatility of stocks," Economics and Politics, Wiley Blackwell, vol. 36(3), pages 1261-1288, November.
    18. Guo, Xiaodong & Pang, Caiji & Qiao, Zheng & Yao, Xiangkun, 2024. "Institutional investor cliques and stock price efficiency: Evidence from China," Journal of Financial Markets, Elsevier, vol. 71(C).
    19. Li, Lu & Li, Yihang & Wang, Xueding & Xiao, Tusheng & Zhu, Hongjun, 2022. "Hedge fund networks, information dissemination, and stock price comovement: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 83(C).
    20. Huan Liu & Weiqi Liu & Yi Li, 2022. "Private Information Dissemination and Noise Trading: Implications for Price Efficiency and Market Liquidity," Sustainability, MDPI, vol. 14(18), pages 1-19, September.

    More about this item

    Keywords

    Supply chain transparency; Institutional investors; Network clique; Private information;
    All these keywords.

    JEL classification:

    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolet:v:248:y:2025:i:c:s0165176525000837. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolet .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.