Outside Ownership in the Hedge Fund Industry
60 Pages Posted: 4 Sep 2015 Last revised: 4 Oct 2016
Date Written: September 13, 2016
I examine the impact of hedge fund managers selling ownership stakes in their firms to outside owners. Fund companies that sell stakes to outside owners open more new funds and attract higher fund flows, suggesting that managers sell stakes to obtain strategic growth partners. The flow impact is greater for funds i) with lower prior flows, ii) with lower assets under management, iii) purchased by more experienced outside owners, and iv) funds purchased by firms with asset management divisions. Although funds with outside owners do not subsequently outperform their peers, fund investors benefit from a reduction in returns management.
Keywords: Hedge funds, ownership, growth, monitoring
JEL Classification: G23, D83, L25
Suggested Citation: Suggested Citation