Abstract: Given the newly emerging joint-shareholding by funds, both academic and professional circles are concerned with whether such fund cliques contribute to market stability or amplify market volatility. This paper identifies fund cliques based on fund holding data and examines the impact of their shareholdings on stock price volatility. The findings indicate that fund cliques exacerbate stock price volatility and undermine the stability of securities markets. Fund cliques exacerbate stock price volatility primarily by fueling price bubbles and attracting speculative investors who follow the trend, while failing to exert a stabilizing effect through improving corporate governance. Further analysis reveals that lower stability in fund clique shareholding strengthens their amplifying effect on stock price volatility. This exacerbating effect is more pronounced when a stock is heavily held by a single fund clique, or when the fund cliques exhibit stronger performance and smaller size. Moreover, fund cliques significantly increase the risk of stock price crashes. This study provides theoretical and empirical evidence for preventing financial risks and maintaining market stability, while offering policy implications for strengthening the regulation of fund behavior and promoting the healthy development of capital markets.

Key words: fund clique, capital market stability, institutional investor, stock price volatility