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Fund investor cliques and flow sensitivity—evidence from China

Author

Listed:
  • Guo, Xueting
  • Ma, Weichun
  • Liu, Xiaotong
  • Mo, Yan

Abstract

Although fund investor cliques have received widespread attention, their motives have not been thoroughly explored. We use a sample of actively managed open-end public equity funds in China during 2006 - 2020 to construct fund investor cliques. We then empirically examine the effect of fund flow characteristics on fund investor cliques. The empirical results show that the tendency of fund investor to clique is more pronounced when fund flows are more sensitive to fund performance. We also construct Reliance on Public Information (RPI) indicator as an instrumental variable to address the endogeneity problem in the empirical process.

Suggested Citation

  • 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).
    • Handle: RePEc:eee:finlet:v:58:y:2023:i:pb:s1544612323008358
    DOI: 10.1016/j.frl.2023.104463
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    More about this item

    Keywords

    Public funds; Fund investor cliques; Fund flow sensitivity; RPI;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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