This paper formulates a simple agency problem in a single division firm and has that firm merge with another firm having the same agency problem. The merger creates synergy, but it also causes the principal to lose information in observing the agent's performance. We call the latter problem the...

Why has the aggregate level of hedge fund alpha (risk-adjusted return) decreased over the last decade? By studying the distribution of individual hedge fund alphas, we find that the large right tail (the percentage of funds with positive alphas) that was once present has shrunk over time, while...