Contrary to offshore hedge funds, US-registered (ldquo;onshorerdquo;) funds are subject to strict marketing prohibitions, accredited investor requirements, limited number of investors, and tax disadvantage. We exploit this difference to test predictions about organizational design, capital flow,...

We undertake a comprehensive analysis of onshore and offshore hedge funds to study the effects of fund regulation and investor clienteles on a fund's share restrictions, asset liquidity, flow-performance sensitivity, and performance. Liquid asset holdings and share restrictions on investor...