I study hedge fund herding patterns in currency futures contracts and find evidence of herding. High-interest (low-interest) currencies exhibit higher buy-side (sell-side) herding, consistent with carry trade positions. A strategy herding measure is then proposed that is used to track hedge fund...

Using a comprehensive and survivor-bias free dataset of U.S. hedge funds, we document the role that inside investment plays in managerial compensation and fund performance. We find that funds with greater investment by insiders outperform funds with less “skin in the game” on a...

We link dividends with profits and good corporate governance. However, do dividends provide other information? Are they useful in identifying the economic cycle? And if so, how might one use that information as to gain an edge when investing in the stock market? We study in details different...

Hedge fund managers contribute substantial personal capital, or "skin in the game," into their funds. While these allocations may better align incentives, managers may also strategically allocate their private capital in ways that negatively affect investors. We find that funds with more inside...

In the 2000's large hedge funds became major investors in illiquid assets. When returns were steady, inflows and outflows of capital balanced each other out. But, in 2008 and 2009 investors removed capital at rapid rates despite depressed prices. In this paper we develop a Bayesian model where...

We examine how institutional investors trade stocks with high research and development (R&D) expenses and investigate whether they can detect value-relevant R&D. We document significant differences between hedge funds and other institutional investors in terms of their trading in high R&D...

Hedge fund managers contribute substantial personal capital, or "skin in the game," into their funds. While these allocations may better align incentives, managers may also strategically allocate their private capital in ways that negatively affect investors. We find that funds with more inside...

We study the relation between hedge fund equity holdings and measures of informational efficiency of stock prices derived from intraday transactions, as well as daily data. Our findings support the role of hedge funds as arbitrageurs who reduce mispricing in the market. Hedge funds invest in...

This paper investigates the role of institutional trading in the emergence of hedge fund activism – an important corporate governance mechanism. We demonstrate that institutional sales raise a firm's probability of becoming an activist target. Further, by exploiting the funding circumstances...