Is There a Cost to Transparency?

36 Pages Posted: 25 Apr 2011  

Philippe Jorion

University of California, Irvine - Paul Merage School of Business

Rajesh K. Aggarwal

Northeastern University

Multiple version iconThere are 2 versions of this paper

Date Written: April 14, 2011

Abstract

This is the first paper that directly tests the cost of transparency. More precisely, we examine whether a willingness to offer transparency to investors is beneficial or costly in terms of hedge fund returns. We measure a fund’s willingness to offer transparency by whether it accepts managed accounts, which are directly controlled by investors. Overall, we find no evidence that a willingness to offer private transparency harms fund returns. In addition, there is no support for concerns that managers offering transparency suffer from selection bias.

Keywords: hedge funds, transparency, managed accounts, performance evaluation, fraud

JEL Classification: G11, G23, G32

Suggested Citation

Jorion, Philippe and Aggarwal, Rajesh K., Is There a Cost to Transparency? (April 14, 2011). Available at SSRN: https://ssrn.com/abstract=1822266 or http://dx.doi.org/10.2139/ssrn.1822266

Philippe Jorion (Contact Author)

University of California, Irvine - Paul Merage School of Business ( email )

Campus Drive
Irvine, CA 92697-3125
United States
949-824-5245 (Phone)
949-824-8469 (Fax)

Rajesh K. Aggarwal

Northeastern University ( email )

413 Hayden Hall
360 Huntington Avenue
Boston, MA 02115
United States

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