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Dodd-Franking the Hedge Funds

37 Pages Posted: 20 Nov 2014 Last revised: 10 May 2016

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

Sofia Johan

York University - Schulich School of Business; Tilburg Law and Economics Center (TILEC)

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Date Written: May 9, 2016

Abstract

This paper analyzes the impact of the Dodd-Frank Act on hedge fund performance, risk, and fund flows. The data indicate that, relative to non-US hedge funds, US hedge funds that are regulated under Dodd-Frank have experienced greater decline in fund alphas, return standard deviation, and information ratio in the post-Dodd-Frank implementation period. We find evidence that capital flows out of US hedge funds after the implementation of Dodd-Frank. We show some differences in these findings depending on fund size and strategy. The findings are robust to difference-in-differences analyses comparing US to non-US funds, among other things.

Keywords: Hedge Funds, Dodd-Frank, Law and Finance

JEL Classification: G23, G24, G28, K22

Suggested Citation

Cumming, Douglas J. and Dai, Na and Johan, Sofia, Dodd-Franking the Hedge Funds (May 9, 2016). Available at SSRN: https://ssrn.com/abstract=2527679 or http://dx.doi.org/10.2139/ssrn.2527679

Douglas J. Cumming

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

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

Na Dai (Contact Author)

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

1400 Washington Ave.
Albany, NY 12222
United States

Sofia A. Johan

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

Tilburg Law and Economics Center (TILEC) ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands

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