Investor Irrationality and Closed-end Hedge Funds
AbstractThe present study assesses the rationality of investors who pay large sums to hedge fund managers for their services. For my analysis I use a sample of closed-end funds which invest their capital in one or more open-ended hedge funds. The results imply that investors rationally exploit the available information when deciding whether to engage in the initial public offering of a new closed-end fund. However, I also find evidence that investors react with a burst of irrational pessimism to the worsening economic conditions in the second half of 2008.
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Bibliographic InfoArticle provided by Capco Institute in its journal Journal of Financial Transformation.
Volume (Year): 30 (2010)
Issue (Month): ()
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investor irrationality; hedge funds; closed-end funds;
Find related papers by JEL classification:
- G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
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