Proceedings of the 2026 3rd International Conference on Applied Economics, Management Science and Social Development (AEMSS 2026)

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Stock Fragility and Corporate Investment Decisions: Evidence from Chinese Mutual Funds

Authors
Huan Liao1, *
1Nankai University, Tianjin, 300350, China
*Corresponding author. Email: 2120233116@mail.nankai.edu.cn
Corresponding Author
Huan Liao
Available Online 12 May 2026.
DOI
10.2991/978-94-6239-672-2_53How to use a DOI?
Keywords
Institutional Fragility; Stock Return Volatility; Corporate Financial Policies
Abstract

This paper studies stock price fragility driven by correlated mutual fund trading and its implications for equity volatility and corporate financial policies in the Chinese A-share market. Building on Greenwood and Thesmar (2011), we show that fragility robustly predicts future return volatility and outperforms conventional ownership measures. Firms exposed to higher fragility hold more cash, consistent with precautionary motives, with stronger effects among non-state-owned enterprises. Exploiting China’s alternating mutual fund disclosure regime, we find that fragility constructed from top-ten holdings exhibits greater economic magnitude and statistical significance than that based on full holdings, highlighting the dominant role of core institutional positions. Overall, stock fragility has material effects on both market risk and firms’ real decisions.

Copyright
© 2026 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title
Proceedings of the 2026 3rd International Conference on Applied Economics, Management Science and Social Development (AEMSS 2026)
Series
Advances in Economics, Business and Management Research
Publication Date
12 May 2026
ISBN
978-94-6239-672-2
ISSN
2352-5428
DOI
10.2991/978-94-6239-672-2_53How to use a DOI?
Copyright
© 2026 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Cite this article

risenwbib
TY  - CONF
AU  - Huan Liao
PY  - 2026
DA  - 2026/05/12
TI  - Stock Fragility and Corporate Investment Decisions: Evidence from Chinese Mutual Funds
BT  - Proceedings of the 2026 3rd International Conference on Applied Economics, Management Science and Social Development (AEMSS 2026)
PB  - Atlantis Press
SP  - 560
EP  - 567
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6239-672-2_53
DO  - 10.2991/978-94-6239-672-2_53
ID  - Liao2026
ER  -