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Information Investment Regulation and Portfolio Delegation

Author

Listed:
  • Akihiko Ikeda

    (Faculty of Economics and Business Administration, Kyoto University of Advanced Science)

  • Hiroshi Osano

    (Institute of Economic Research, Kyoto University)

Abstract

We consider policies to achieve the social optimal level of investment in information acquisition by examining arbitrageur investment strategy and the likelihood of a market freeze in equilibrium. We show that if direct portfoliomanagement is dominant, an investment subsidy may be better, whereas if delegated portfolio management is dominant, an investment tax is needed to prevent overinvestment, although this raises the possibility of a market freeze. We use this to evaluate the effect of the recent trend in hedge funds switching their operations to family offices and shed light on recent regulatory discussion of FinTech and Big Tech firms.

Suggested Citation

  • Akihiko Ikeda & Hiroshi Osano, 2020. "Information Investment Regulation and Portfolio Delegation," KIER Working Papers 1032, Kyoto University, Institute of Economic Research.
    • Handle: RePEc:kyo:wpaper:1032
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    File URL: http://www.kier.kyoto-u.ac.jp/DP/DP1032.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    adverse selection; delegated portfolio management; FinTech; information investment; market freeze;
    All these keywords.

    JEL classification:

    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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