An Empirical Study On The Influence Of Fund Manager’s Risk-taking Behavior By Fund Competition

With the rapid growth of our national economy, the average income of residents has greatly improved and the concept of financial management become more and more popular which causes more and more capital investment in the securities market. Since the retail investors do not have professional securities market analysis ability, they are more willing to buy the financial products, such as a fund of which income is relatively fixed and which is managed by professional people. The rapid development of the fund market is also accompanied by more and more problems, such as insider trading and related transaction.This paper carry out a research on the fund performance rankings which is cheated as a contest here. Fund managers as a part of competition, they strongly hope to win this game, because our country’s fund manager management fee is extracted according to the fixed ratio of the net worth of total assets. For example, stock fund is extracted 1% ~ 1.5% of total net assets. So each one fund manager wants to win this race and let more capital inflows to earn higher income. In this paper, the results of the annual ranking of the fund is the research background. This paper analysis the risk adjustment behavior and whether better achievement could be produced after adjusting the the risk of investment portfolio from the viewpoint based on incentive mechanism that the fund manager faces.In this paper, the data selection is open to ordinary stock fund set up before 2006. Through the descriptive statistics analysis of the sample fund, the tests of sample data are carried out by the grouping test method and the risk of portfolio adjustment is studied by using regression analysis method. Finally this paper finds that the manager of the fund which is low-ranking in the performance will increase the risk of the portfolio of the fund industry before the contest, especially in the period of cattle. While, in the bear market period of industry, fund ranking can not drive fund manager to improve the degree of risk of portfolio.This paper also finds that the risk taking ability of the fund will also affect the risk adjustment of fund manager before the competition. Fund managers who take more risk in the early period of contest, the more they will reduce the risk. More total net assets of the fund can drive fund manager to take more risk in the period of competition, especially in the bear market period of fund industry. The risk adjustment of the fund is not significantly affected by the change of fund manager. In the whole of purchase and redemption of fund can drive fund managers to assume greater risk portfolio. Adjustment ratio of losers is higher than that of winners and the ranking of the fund has more influence in the bull market than in the bear market period.This study also finds that the adjustment by fund managers on the risk of portfolio can significantly promote the performance of the fund industry, especially in the bear market period. The performance of the funds in the early period of contest can also affect its year-end performance. The better performance in the early period of contest, the better year-end performance. The total net assets of the fund can significantly affect the year-end performance of the fund. The change of fund managers doesn’t significantly influence the year-end performance of fund. At the same time, capital inflow can promote the performance of year-end performance of fund.。...