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Fund cliques and firms’ information environment: information efficiency or noise trading?

Danglun Luo et al.

China Journal of Accounting Research2026https://doi.org/10.1016/j.cjar.2025.100460article
AJG 2ABDC A
Weight
0.50

Abstract

Fund cliques (i.e., mutual funds holding the same stocks) are a common feature of global financial markets, raising the question: How do fund cliques shape firms’ information environment? Do they improve information efficiency or amplify noise trading? Using a sample of Chinese A-share listed companies from 2004 to 2020, we explore the impact of fund cliques on firms’ information environment (measured by stock price synchronicity). Research has found that the increase in the degree of fund clique significantly reduces stock price synchronicity. Our evidence supports the noise trading channel, showing that fund cliques amplify noise trading by reducing the marginal returns of private information acquisition or distorting price signals. Using the unique characteristics of the Chinese market, our paper enriches research on stock price synchronicity and institutional investor behavior, and provides references for emerging capital markets to optimize institutional investor supervision and improve firms’ information environment.

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https://doi.org/https://doi.org/10.1016/j.cjar.2025.100460

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@article{danglun2026,
  title        = {{Fund cliques and firms’ information environment: information efficiency or noise trading?}},
  author       = {Danglun Luo et al.},
  journal      = {China Journal of Accounting Research},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1016/j.cjar.2025.100460},
}

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.