Information Investment Regulation and Portfolio Delegation

Akihiko Ikeda () and Hiroshi Osano
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Akihiko Ikeda: Faculty of Economics and Business Administration, Kyoto University of Advanced Science

No 1032, KIER Working Papers from Kyoto University, Institute of Economic Research

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.

Keywords: adverse selection; delegated portfolio management; FinTech; information investment; market freeze (search for similar items in EconPapers)
JEL-codes: D86 G14 G33 (search for similar items in EconPapers)
Pages: 69 pages
Date: 2020-05
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