Investor Network Density and Stock Crash Risk

ABSTRACT Using the shareholding data of fund institutional investors on the Shanghai and Shenzhen stock exchanges, this paper constructs institutional investor networks of stocks and investigates the influence of investor network density on stock price crash risk. Empirical results show that investor network density has a significant restraining effect on stock price crash risk by reducing the delay in stock price response to information to a certain extent. The results are robust to alternative measurements of stock price crash risk and subsamples of stocks with enterprises' different property rights and institutional investors' shareholding ratios.