A Law and Finance Analysis of Hedge Funds

Financial Management, Forthcoming

54 Pages Posted: 21 Feb 2007 Last revised: 10 Nov 2009

See all articles by Douglas J. Cumming

Douglas J. Cumming

Florida Atlantic University

Na Dai

SUNY at Albany - School of Business

Date Written: April 5, 2008

Abstract

This paper empirically analyzes the impact of hedge fund regulation on fund structure and performance. The data indicate restrictions on the location of key service providers and permissible distributions via wrappers are associated with lower fund alphas, lower average monthly returns, and higher fixed fees. Further, restrictions on the location of key service providers are associated with lower manipulation-proof performance measures, while wrapper distributions are associated with lower performance fees. As well, the data show standard deviations of monthly returns are lower among jurisdictions with restrictions on the location of key service providers and higher minimum capitalization requirements.

Keywords: Hedge Funds, Regulation, Law and Finance

JEL Classification: G23, G24, G28, K22

Suggested Citation

Cumming, Douglas J. and Dai, Na, A Law and Finance Analysis of Hedge Funds (April 5, 2008). Financial Management, Forthcoming, Available at SSRN: https://ssrn.com/abstract=946298

Douglas J. Cumming (Contact Author)

Florida Atlantic University ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

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

Na Dai

SUNY at Albany - School of Business ( email )

1400 Washington Ave.
Albany, NY 12222
United States

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