What Drives Dodd-Frank Act Compliance Cost for Private Funds?

Posted: 11 Jul 2015 Last revised: 22 May 2019

See all articles by Wulf A. Kaal

Wulf A. Kaal

University of St. Thomas, Minnesota - School of Law

Date Written: July 10, 2015

Abstract

This study assesses the effects of Dodd-Frank Act compliance costs on the private fund industry. Using hand-selected compliance cost estimates from private fund advisers (N=94) the study shows with two independent datasets that the number of funds managed by private fund advisers is associated with Dodd-Frank Act compliance cost. The size of registered private fund advisers as measured by assets under management is not associated with the per-unit cost of Title IV compliance and other independent variables as proxies for cost. These findings are consistent with the hypothesis that the cost of financial regulation under the Dodd-Frank Act brings increasing returns to scale. Private fund advisers’ use of single versus multiple investment strategies does not have an effect on Title IV compliance costs.

Keywords: Private Funds, Dodd-Frank Act, Compliance Cost, Barriers to Entry, Returns to Scale

JEL Classification: G23, G24, G28, K22

Suggested Citation

Kaal, Wulf A., What Drives Dodd-Frank Act Compliance Cost for Private Funds? (July 10, 2015). The Journal of Alternative Investments (2016); U of St. Thomas (Minnesota) Legal Studies Research Paper No. 15-13; https://doi.org/10.3905/jai.2016.19.1.008. Available at SSRN: https://ssrn.com/abstract=2629386 or http://dx.doi.org/10.2139/ssrn.2629386

Wulf A. Kaal (Contact Author)

University of St. Thomas, Minnesota - School of Law ( email )

MSL 400, 1000 La Salle Avenue
Minneapolis, MN Minnesota 55403-2005
United States

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