Overview and details of the sessions of this conference. Please select a date or location to show only sessions at that day or location. Please select a single session for detailed view (with abstracts and downloads if available).
Please note that all times are shown in the time zone of the conference. The current conference time is: 14th May 2024, 12:41:38am EDT
Spreading Sunshine in Private Equity: Agency Costs and Financial Disintermediation
Yingxiang Li
University of British Columbia, Canada
Discussant: Joan Farre-Mensa (University of Illinois at Chicago)
This paper studies the role of regulatory oversight in increasing market transparency and facilitating financial intermediation. I exploit an unanticipated reform that substantially expanded the regulatory oversight of private equity (PE) fund advisers, which reduces the information asymmetry faced by investors. Institutional investors that have more pre-existing relationships with regulated PE fund advisers are less likely to bypass external fund vehicles when investing in private companies. While disintermediation in PE markets allows investors to mitigate agency costs associated with intermediation, it could result in capital misallocation. There is little evidence of adverse selection in the deals available to investors, but they tend to finance more mature, larger, and less innovative companies when investing directly, as opposed to investing through PE funds. Overall, my findings highlight the limits of market governance in PE funds and the positive role of regulatory intervention in shaping the organizational structure of PE markets.
The Dodd-Frank Act and Hedge Fund Operational Risk
William Goetzmann1, Bing Liang2, Jue Wang2
1Yale University; 2University of Massachusetts Amherst
Discussant: Veronika Pool (Vanderbilt University)
We examine the impact of the post-Dodd-Frank change in 2011 on hedge fund disclosure. We find that new disclosure questions added to Form ADV improve the ability to forecast future adverse operational events compared to the information disclosed pre-Dodd-Frank. A byproduct of the analysis is a uni-dimensional operational risk score based on information from the SEC website. The measure is effective in predicting liquidation events, changes in leverage, and other performance metrics. It is also predictive of net fund flows, suggesting that investors take into account operational risk when making investment decisions.
