Outside Ownership in the Hedge Fund Industry

60 Pages Posted: 4 Sep 2015 Last revised: 4 Oct 2016

Date Written: September 13, 2016

Abstract

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

Mullally, Kevin, Outside Ownership in the Hedge Fund Industry (September 13, 2016). Available at SSRN: https://ssrn.com/abstract=2654783 or http://dx.doi.org/10.2139/ssrn.2654783

Kevin Mullally (Contact Author)

University of Central Florida ( email )

412 CBA
Orlando, FL 32827
United States
407-823-2360 (Phone)

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