Capital Flows and Hedge Fund Regulation

35 Pages Posted: 16 Apr 2008 Last revised: 21 Oct 2009

Douglas J. Cumming

York University - Schulich School of Business

Na Dai

State University of New York at Albany - School of Business & Center for Institutional Investment Management

Multiple version iconThere are 2 versions of this paper

Date Written: September 1, 2008

Abstract

This paper introduces a cross-country law and finance analysis of the flow-performance relationship for hedge funds. The data indicate that distribution channels in the form of private placements and wrappers mitigate the impact of performance on fund flows. Distribution channels via investment managers and fund distribution companies enhance the impact of performance on fund flows. Funds registered in countries which have larger minimum capitalization requirements for funds have higher levels of capital flows. Funds registered in countries which restrict the location of key service providers have lower levels of capital flows. Further, offshore fund flows and calendar effects evidenced in the data are consistent with tax factors influencing fund flows. Our findings are robust to Heckman-selection effects for offshore registrants, among other robustness checks.

Keywords: Flow, Performance, Hedge Funds, Regulation, Law and Finance

JEL Classification: G23, G24, G28, K22

Suggested Citation

Cumming, Douglas J. and Dai, Na, Capital Flows and Hedge Fund Regulation (September 1, 2008). 3rd Annual Conference on Empirical Legal Studies Papers. Available at SSRN: https://ssrn.com/abstract=1026683 or http://dx.doi.org/10.2139/ssrn.1026683

Douglas J. Cumming (Contact Author)

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

HOME PAGE: http://booksite.elsevier.com/9780124095373/

Na Dai

State University of New York at Albany - School of Business & Center for Institutional Investment Management ( email )

1400 Washington Ave.
Albany, NY 12222
United States

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