Political Connections, Corruption, and Investment Decisions of Chinese Mutual Funds (with Kryzanowski, L., Currently under review and revision at the British Accounting Review, ABDC A* ranked journal)

We examine the impact of political connections on the investment decisions of Chinese mutual funds. We identify a direct link between mutual funds’ political connections and stocks held from the same political network using hand-collected information on the professional backgrounds of Chinese mutual fund managers and fund management company (FMC) shareholders. While mutual funds tend to allocate more investments to stocks based on their political connections, this effect alleviates somewhat after the 2012 anti-corruption campaign. Our findings suggest that anti-corruption campaigns can help to reduce the political effects of government-related agencies on fund holdings and contribute to better market fairness.

Do Political Backgrounds of Fund Managers Affect Performance? (with Kryzanowski, L.)

This study uses hand-collected information on the professional backgrounds of Chinese mutual fund managers to identify their political connection types. We find that funds with politically connected fund managers, primarily attributable to those with government department experiences, generally outperform managers without political connections before the 2012 anti-corruption campaign, but generally perform no difference after the 2012 campaign except for some economically unstable periods such as the global 2008 Financial and 2020 health crises. Our findings suggest that the anti-corruption campaign successfully contributed to greater market fairness by helping to reduce self-serving agency links between fund managers and government officials.

He, C., Kryzanowski. L. & Zhao, Y. (2023). Political connections of Chinese fund management companies and fund performance, The Financial Review, 00, 1– 30.

This study uses hand-collected information on shareholders’ backgrounds of mutual funds and their fund management companies (FMCs), and administrative and criminal penalties for insider trading as the proxy of government regulation intensity. We fill a gap in the literature by identifying a positive relationship between funds’ performance and the proportion of state-owned FMC ownership that becomes negative when the Chinese government increased its regulatory effort to reduce informational advantages from political connections obtained through this ownership channel. Results are robust using DiD and IV analyses, placebo tests, propensity score matching, Oster test for missing covariates, channel tests, and alternate ownership classifications.

Ben Omrane, W., He, C., He. Z. & Trabelsi, S. (2017). Forecasting the yield curve of government bonds: a dynamic factor approach, Journal of Managerial Finance, 43(7), 774-793.

Forecasting the future movement of yield curves contains valuable information for both academic and practical issues such as bonding pricing, portfolio management, and government policies. The purpose of this paper is to develop a continuously improved machine learning algorithm that can dynamically provide precise and consistent forecasting results under various yield curve environments.

"Do Political Backgrounds of Fund Managers Affect Performance?" Administrative Sciences Association of Canada (ASAC). Toronto Metropolitan University, Toronto, ON, June 2023.