Publication Type

Journal Article

Version

acceptedVersion

Publication Date

8-2018

Abstract

Hedge funds managed by listed firms significantly under-perform funds managed by unlisted firms. The under-performance is more severe for funds with low manager deltas, poor governance, and no manager co-investment, or managed by firms whose prices are sensitive to earnings news. Notwithstanding the under-performance, listed asset management firms raise more capital, by growing existing funds and launching new funds post listing, and harvest greater fee revenues than do comparable unlisted firms. The results are consistent with the view that, for asset management firms, going public weakens the alignment between ownership, control, and investment capital, thereby engendering conflicts of interest.

Keywords

Hedge funds, Initial Public Offering, Agency, Conflicts of interest, Short-termism

Discipline

Finance and Financial Management

Research Areas

Finance

Publication

Journal of Financial Economics

Volume

131

Issue

1

First Page

44

Last Page

60

ISSN

0304-405X

Identifier

10.1016/j.jfineco.2018.09.004

Publisher

Elsevier

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1016/j.jfineco.2018.09.004

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