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Full-Text Articles in Finance and Financial Management
Responsible Hedge Funds, Hao Liang, Lin Sun, Song Wee Melvyn Teo
Responsible Hedge Funds, Hao Liang, Lin Sun, Song Wee Melvyn Teo
Research Collection Lee Kong Chian School Of Business
Hedge funds that endorse the United Nations Principles for Responsible Investment (PRI) underperform other hedge funds after adjusting for risk but attract greater investor flows, accumulate more assets, and harvest greater fee revenues. Consistent with an agency explanation, the underperformance is driven by PRI signatories with low environmental, social, and governance (ESG) exposures and is greater for hedge funds with poor incentive alignment. To address endogeneity, we exploit regulatory reforms that enhance stewardship and show that the ESG exposure and relative performance of signatory funds improve post reforms. Our findings suggest that some hedge funds endorse responsible investment to pander …
Hedge Fund Franchises, William Fung, David Hsieh, Narayan Naik, Melvyn Teo
Hedge Fund Franchises, William Fung, David Hsieh, Narayan Naik, Melvyn Teo
Research Collection Lee Kong Chian School Of Business
We investigate the growth strategies of hedge fund firms. We find that firms with successful first funds are able to launch follow-on funds that charge higher performance fees, set more onerous redemption terms, and attract greater inflows. Motivated by the aforementioned spillover effects, first funds outperform follow-on funds, after adjusting for risk. Consistent with the agency view, greater incentive alignment moderates the performance differential between first and follow-on funds. Moreover, multiple-product firms underperform single-product firms but harvest greater fee revenues, thereby hurting investors while benefitting firm partners. Investors respond to this growth strategy by redeeming from first funds of firms …
Hedge Fund Franchises, William Fung, David Hsieh, Narayan Y. Naik, Melvyn Teo
Hedge Fund Franchises, William Fung, David Hsieh, Narayan Y. Naik, Melvyn Teo
Research Collection Lee Kong Chian School Of Business
Duplicate, see https://ink.library.smu.edu.sg/lkcsb_research/5964/. We investigate the growth strategies of hedge fund firms. We find that firms with successful first funds are able to launch follow-on funds that charge higher performance fees, set more onerous redemption terms, and attract greater inflows. Motivated by the aforementioned spillover effects, first funds outperform follow-on funds, after adjusting for risk. The multiple-product growth strategy hurts investors while benefiting hedge fund firms; multiple-product firms underperform single-product firms but harvest greater fee revenues. Investors respond to this growth strategy by redeeming from first funds of firms with follow-on funds that do poorly. Moreover, skilled investors allocate …
Public Hedge Funds, Lin Sun, Song Wee Melvyn Teo
Public Hedge Funds, Lin Sun, Song Wee Melvyn Teo
Research Collection Lee Kong Chian School Of Business
Hedge funds managed by listed firms significantly underperform funds managed by unlisted firms. The underperformance 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 underperformance, 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.
Public Hedge Funds, Lin Sun, Song Wee Melvyn Teo
Public Hedge Funds, Lin Sun, Song Wee Melvyn Teo
Research Collection Lee Kong Chian School Of Business
Hedge funds managed by listed firms significantly underperform funds managed by unlisted firms. The underperformance 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 underperformance, 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.
Do Venture Capitalists Play A Monitoring Role In An Emerging Market: Evidence From The Pay-Performance Relationship Of Chinese Entrepreneurial Firms?, Jerry X. Cao, Qigui Liu, Gary G. Tian
Do Venture Capitalists Play A Monitoring Role In An Emerging Market: Evidence From The Pay-Performance Relationship Of Chinese Entrepreneurial Firms?, Jerry X. Cao, Qigui Liu, Gary G. Tian
Research Collection Lee Kong Chian School Of Business
This paper investigates venture capitalists’ monitoring of managerial behaviour by examining their impact on CEO pay-performance sensitivity across various controlling structures in Chinese firms. We find that the effectiveness of venture capitalists' monitoring depends on different types of agency conflict. In particular, we find that venture capital (VC) monitoring is hampered in firms that experience severe controlling-minority agency problems caused by disproportionate ownership structures. We provide further evidence that VC is more likely to exert close monitoring in firms that have greater managerial agency conflict, and thus require more direct monitoring. However, controlling-minority agency problems have a greater impact on …