The influence of the social networks of fund managers on the herding behavior of SIFs in China

Abstract

This paper explores the influence of fund managers’ social networks on the herding behavior of securities investment funds (SIFs) in China. Using the data of Chinese SIFs in recent years as a sample, it adopts the CSAD model to measure SIFs’ herding behavior. Combining indicators such as social network centrality, constraint, and size, it constructs a regression model of the influence of fund managers’ social networks on the herding behavior of SIFs and conducts an empirical study. The heterogeneity of this influence is investigated in four dimensions, degree of herding behavior, gender, diploma, and region. The results show that: (i) The larger the social network size of fund managers, the lower the degree of herding behavior of fund managers, but the effect of the network constraint on the degree of herding behavior is not significant. (ii) When the degree of herding behavior of SIFs is high, the effect of network size on herding behavior is heterogeneous. (iii) The relationship between the social network of male fund managers and the degree of herding behavior is more significant than that of female fund managers, as network size is significant for male fund managers, while the regression results of social network centrality, network constraint, network size, and the degree of herding behavior of female fund managers are all not significant. (iv) The social network of the fund manager with a master’s degree has a significant impact on the herding behavior of SIFs, which is not significant in fund managers with Ph.D.

Does Herding and Anti-Herding Reflect Portfolio Managers’ Abilities in Emerging Markets?

“…Information exchange and communication facilitate herding, with managers utilizing various platforms like alumni networks, conferences, firm visits and professional forums [29][30][31]. Factors such as education [32], gender [33], culture [34], and professional background also influence herding behaviors. Herding may temporarily inflate stock prices but could lead to future crashes [35].…”