Did the STOCK Act Impact the Performance, Risk, and Flow of Hedge Funds?

International Journal of Managerial Finance, Forthcoming

44 Pages Posted: 1 Oct 2021 Last revised: 4 Oct 2021

See all articles by Meet Shah

Meet Shah

Ryerson University - Ted Rogers School of Management

Laleh Samarbakhsh

Ryerson University - Ted Rogers School of Management

Date Written: April 7, 2021

Abstract

This research examines hedge funds’ performance, risk, and flow before and after the implementation of the Stop Trading on Congressional Knowledge (STOCK) Act. This study finds significant differences before and after the implementation of the STOCK Act. The results for the entire sample period indicate that hedge funds suffered lower-alpha, standard deviation, and idiosyncratic risk after the implementation of the STOCK Act. Consistent with other studies, the findings suggest that private, confidential information was likely passed down from members of Congress to hedge fund managers through intermediary agents. Furthermore, the results indicate mixed evidence for the STOCK Act’s impact on hedge funds’ flow for most investment categories, which points to the direction that top-level hedge funds received more significant capital inflows.

Keywords: Hedge funds, Legislative Acts, Fund Flow, Policy Performance

JEL Classification: G11, G23, G38

Suggested Citation

Shah, Meet and Samarbakhsh, Laleh, Did the STOCK Act Impact the Performance, Risk, and Flow of Hedge Funds? (April 7, 2021). International Journal of Managerial Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3932711

Meet Shah (Contact Author)

Ryerson University - Ted Rogers School of Management ( email )

350 Victoria Street
Toronto, Ontario M5B 2K3
Canada

Laleh Samarbakhsh

Ryerson University - Ted Rogers School of Management ( email )

Toronto, ON
Canada

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