Research On The Relationship Between The Media Attention And Open-end Fund Cash Flow

The securities investment fund market has stepped into a stage of disciplined development after the implementation of “Securities Investment Fund Law” of 2004 in China. The fund market has experienced series of expansion, diversity of fund companies established, and the fund categories increased continuously. Many new types of fund were accepted by investors, for example, open-end funds, ETF and so on. The fund market became more and more important in the securities market. At the same time, the development of Internet technology makes the network media industry obtained the unprecedented prosperity, and the emergence of the search engines make it easier for people to get information. As a consequence, fund market investors get most information from network news media. However, too much information makes investors confused. Attention is defined as a scarce resource of cognition in the cognitive psychology. Compared with large amounts of information, investors’ attention appears relatively scarce. In this background, this paper tries to study the relationship between the media attention and the open-end fund cash flow.After the summary of existing literature, this paper analyzes the relationship between the media attention and the open-end fund cash flow theoretically. Based on the theory of cognitive psychology, we realize that the investors’ attention is limited. Then this paper studies how the media news influences the investors’ attention allocation. Insisting that media attention may drive investors to make trading decisions, this paper draws the conclusion that media attention will influence open-end fund cash flow theoretically.In the chapter of empirical analysis, this paper takes the amount of net media news about fund as the attention level of the fund. Using 703 open-end funds as sample, this paper takes the period from the second quarter of 2004 to the third quarter of 2013 as time period, and then makes a panel data including variables such as media attention, open-end cash flow, the scale of fund, the age of fund and so on. This paper draws the conclusion that the media can explain the change of open-end cash flow in terms of statistics and reality. In addition, the scale of fund, the age of fund and some others variable can influence the relationship between media attention and open-end fund cash flow.Drawing the conclusion that media attention is good to open-end fund’s net cash flow, this paper thinks that there may be attention-driven buying behavior among the investors. To find out whether it is a good behavior, this paper makes an empirical analysis by difference classification method. The result shows that, taken as a whole, the investors in Chinese fund market do not have the ability to choose excellent manager, and the attention-driven behavior is not a better investment strategy.Finally, on the base of the conclusion of the whole paper, the last chapter points out the problem of this paper and the problem which need further research.