A Law and Finance Analysis of Hedge Funds |
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| Authors: | Douglas Cumming Na Dai |
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| Affiliation: | 1. Douglas Cumming is a Professor and the Ontario Research Chair in the Schulich School of Business at York University in Toronto, Ontario, Canada.;2. Na Dai is an Assistant Professor in the School of Business at SUNY-Albany in Albany, NY. |
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| 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. Furthermore, 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. |
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