Chunfeng WANG, Tong LI, Shouyu YAO, Zhenming FANG
Enhancing the value investment guidance of institutional investors can help the capital market give full play to its functions of value discovery and resource allocation. We identify mutual fund cliques from the position network of actively managed mutual funds, and explore the impact of mutual fund cliques on the incorporation of stock price information. The results indicate that mutual fund cliques hinder the integration of stock price information, and the conclusion remains valid after a series of robustness tests. In this study, we find through mechanism examination that, at the level of investor trading behavior, mutual fund clique clustering on one hand causes stock liquidity deterioration by reducing competitive trading among clique members and increasing information asymmetry between the mutual fund clique and other external investors. On the other hand, it attracts collective trading from a large number of institutional and retail investors, thereby hindering the incorporation of stock price information. At the level of corporate governance participation, we find that mutual fund clique clustering weakens the market-based supervisory role of the "exit threat'' mechanism on company management, resulting in a decline in the quality of corporate information disclosure and thus impairing the pricing efficiency of the stock market. Furthermore, we find that the delay in stock price information incorporation caused by mutual fund clique clustering is significantly exacerbated during economic downturns, when mutual funds face greater performance pressure, and when individual stocks receive less attention. Moreover, mutual fund clique clustering can induce stock price valuation bubbles and crash risks, laying hidden dangers for the stable operation of the capital market. Starting from the interest binding and shared progress and retreat characteristics within the mutual fund clique, we reveal how this strong network relationship limitation leads to delays in stock price information incorporation by influencing investor trading behavior and corporate governance participation, deepening the understanding of the complexity of institutional investor network structure and its market consequences, and providing important insights for promoting the high-quality development of the mutual fund industry and capital market.