The Board of Directors in Hedge Fund Governance
mar 25
March 25.
12:00 - 13:15
Frankel Leo ut 30-34
Room: 305, CEU InnovationsLab
Social Event
The Board of Directors in Hedge Fund Governance
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Date: March 25, 2013 - 12:00 - 13:15
Building: Frankel Leo ut 30-34
Room: 305, CEU InnovationsLab
Event type: Seminar
Event audience: CEU Community Only

A Guest Scholar Seminar by
Peter Szilagyi

Hedge fund boards have historically been overlooked as an institution lacking relevance and substance. Directors are indeed appointed by the fund manager, mostly supplied by the fund’s service providers and director services, and often lacking in skills and incentives to monitor the fund. Nonetheless, they face growing pressure post-crisis from both investors and regulators to fulfil their fiduciary duties. This paper investigates the role and effectiveness of hedge fund boards for the first time, using hand-collected data from hedge fund documentation previously unavailable for academic research. We find several important results, including evidence that (i) board independence leads to improved fund performance, (ii) directors with risk management experience reduce fund risk without affecting returns, and (iii) funds deliver superior returns and lower risk when they give voting rights to investors (including to elect directors). We conclude that the board can be a very useful source of control in hedge funds, whose governance model traditionally focuses on incentivizing the fund manager.

Short Bio
Peter Szilagyi has been Lecturer in Finance at Cambridge University’s Judge Business School since 2007. His main area of research is corporate finance and corporate governance, but he has also published in other areas including fixed income, international finance, risk management, and financial market development. He has co-edited several volumes and journal special issues, and is the corporate finance subject editor of the International Review of Financial Analysis. Peter obtained his PhD from Tilburg University and was previously a research fellow at the University of Oxford. He has held consulting assignments with the World Bank and the Asian Development Bank, and, before entering academia, worked for the BBC World Service.


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    Moussa Moumouni

    MSc in IT Management class of 2014

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