Hedge Fund Structure, Regulation, and Performance around the World

by Douglas Cumming, Na Dai, Sofia A. Johan

Overview

Hedge funds and their managers have been vilified in recent times for their high-risk activities and relative lack of regulatory oversight. A recurrent concern shared by market participants and regulators around the world is that the increasing size of the hedge fund industry coupled with potential agency problems, activist investment practices, and herding behavior may exacerbate financial instability. However, while it is frequently suggested that hedge funds are unregulated, they are in fact regulated to some degree in every country around the world.

It is important to consider differences in legal and institutional settings across countries as they directly affect the structure, governance, and performance of hedge funds. In this book, the authors consider data from a multitude of countries to understand how and why hedge fund markets differ around the world. While hedge funds are hardly regulated in the US, other jurisdictions implement different and sometimes more onerous sets of regulatory requirements, which cann include, but are not limited to, minimum capitalization requirements, restrictions on the location of key service providers, and different permissible distribution channels via private placements, banks, other regulated or non-regulated financial intermediaries, wrappers, investment managers, and fund distribution companies.

Product Details

ISBN-13:	9780199862566
Publisher:	Oxford University Press
Publication date:	02/22/2013
Pages:	312
Product dimensions:	9.30(w) x 6.10(h) x 0.90(d)

About the Author

Douglas Cumming, JD, PhD, CFA, is a Professor of Finance and Entrepreneurship and the Ontario Research Chair at the Schulich School of Business, York University. His research spans areas that include entrepreneurship, entrepreneurial finance, venture capital, private equity, IPOs, law and finance, market surveillance, and hedge funds. He is a Co-Editor of Entrepreneurship Theory and Practice, and has been a guest editor 9 times for special issues of top journals. He has published 9 books, 28 book chapters, and 85 articles in leading refereed finance, entrepreneurship, management, and legal academic journals since completing his J.D./Ph.D. in 1999.

Na Dai is an Assistant Professor of Finance at the School of Business at the University of Albany (SUNY). Her primary research interests are corporate finance, the public and private offering, the financing of entrepreneurship and innovation, and hedge funds. Her scholarly works have appeared in leading finance journals and entrepreneurship journals.

Sofia Johan, J.D., Ph.D. is an Adjunct Professor of Law, Entrepreneurship and Finance at the Schulich School of Business, York University. Her research areas include entrepreneurship, entrepreneurial finance, venture capital, private equity, IPOs, law and finance, market surveillance and hedge funds.

Table of Contents

Preface

1. Introduction to Hedge Funds

2. Agency Problems in Delegated Portfolio Management

3. International Perspectives on Hedge Fund Regulation

4. Overview of Empirical Finance Methods to Study Hedge Funds

5. Hedge Fund Forum Shopping

6. Hedge Fund Capital Raising

7. Hedge Fund Performance and Compensation

8. Hedge Fund Misreporting

9. Hedge Fund Performance Persistence

10. Hedge Fund Liquidation and Influence on the General Market

11. Conclusions, Unanswered Questions and the Future of the Hedge Fund Industry

Editorial Reviews

"This book is a valuable contribution to the literature on the always-evolving nature of hedge funds in global capital markets. The authors do an excellent job demonstrating that not all capital markets are the same and that market structure and design matter for all stakeholders involved in the hedge fund industry. Regulators, scholars, and investors who want to truly understand the incentives that drive hedge fund managers in where, why, and how they operate should read Hedge Fund Structure, Regulation, and Performance around the World."—Ryan Barry, Managing Director, Diversified Global Asset Management

"To understand the structure and performance of the hedge fund industry it is critically important to grasp the legal and regulatory environment in which these funds operate. This book represents a highly accessible introduction to this set of issues written by some of the leading scholars in the field."—Stephen J. Brown, David S. Loeb Professor of Finance, NYU Stern School of Business

"Hedge funds are complex in structure, opaque in purpose, tough to pin down on actual performance, and generally not well understood, even among many market professionals. Yet, they constitute a multi-trillion dollar phenomenon with massive influence in global capital markets. Thankfully, the new, truly comprehensive and well-researched book by Cumming, Dai and Johan helps guide us through the confusion of the hedge fund business from process to compensation and from reporting to global regulation. Read it!"—Andrew Karolyi, Professor of Finance, Cornell University

"Hedge Fund Structure, Regulation, and Performance around the World is a highly readable and well-reasoned guide to the critical role that hedge funds are playing in capital markets. This book offers a wealth of important insights and ideas that are not only useful for scholars but for private and institutional investors as well as financial market regulators."—Joseph A. McCahery, Professor of International Economic Law, Tilburg University and Duisenberg School of Finance

From the Publisher