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The Strategic Listing Decisions of Hedge Funds

Published online by Cambridge University Press:  24 June 2014

Philippe Jorion  and
Christopher Schwarz
Philippe Jorion
Affiliation:
[email protected], Merage School of Business, University of California at Irvine, Irvine, CA 92697 and Pacific Alternative Asset Management Company
Christopher Schwarz
Affiliation:
[email protected], Merage School of Business, University of California at Irvine, Irvine, CA 92697.
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Abstract

The voluntary nature of hedge fund database reporting creates strategic listing opportunities for hedge funds. However, little is known about how managers list funds across multiple databases or whether investors are fooled by funds’ listing decisions. In this paper, we find that hedge funds strategically list their small, best-performing funds in multiple outlets immediately while preserving the option to list their other funds in additional databases later. We generally find that investors react rationally to these fund listings based on the predictability of performance. Finally, our results lead to specific guidelines on handling backfilled returns to minimize biases.

Type
Research Articles
Information
Journal of Financial and Quantitative Analysis , Volume 49 , Issue 3 , June 2014 , pp. 773 - 796
Copyright
Copyright © Michael G. Foster School of Business, University of Washington 2014 

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