This paper explores the economic rationales underpinning potential hedge fund regulation, and reviews the arguments about why rules aimed to mitigate systemic risk may be economically efficient. The paper presents a limited definition of systemic risk, and proposes that an international macro-prudential supervisory body be set up for the Ontario, U.S. and U.K. markets to collect systemically important information about hedge funds and to recommend policy changes in light of this information. The paper also reviews the proposed regulatory reforms in the United States that will apply to hedge funds, and argues that while helpful, such regulations are sub-optimal because they do not consider certain important characteristics of systemic risk.

This paper explores the economic rationales underpinning potential hedge fund regulation, and reviews the arguments about why rules aimed to mitigate systemic risk may be economically efficient. The paper presents a limited definition of systemic risk, and proposes that an international macro-prudential supervisory body be set up for the Ontario, U.S. and U.K. markets to collect systemically important information about hedge funds and to recommend policy changes in light of this information. The paper also reviews the proposed regulatory reforms in the United States that will apply to hedge funds, and argues that while helpful, such regulations are sub-optimal because they do not consider certain important characteristics of systemic risk.

What explains the shift towards greater direct public oversight of financial markets in international financial regulation that has characterized the response to the global financial crisis of 2007-2010? Over this period, the main international financial regulatory bodies have abandoned the market-based mechanisms that had informed their approach towards the regulation of different financial domains in the years before the crisis and significantly expanded the perimeter of state-based regulation. However, the extent and the timing of this shift cannot be regarded only as the by-product of the crisis, nor they can be explained by the existing interpretations of the political determinants of international regulatory policies. This study builds upon existing state-centric explanations of international regulatory policies, but it goes beyond these works by exploring how the preferences of the most influential countries in response to the crisis have been influenced by variations in the degree of public salience of different financial domains. More specifically, this study argues that the lasting increase in the public salience of financial regulatory policies in the US and different European countries since the last quarter of 2008 has created strong incentives for elected officials in these countries to challenge the market-based approach that had emerged in the decade and half before the crisis and to directly interfere in the international regulatory agenda. In order to explain this shift, this study will analyse the evolution in the international governance of three sets of markets and institutions that have occupied an important position in the international regulatory agenda in recent years: 1) OTC derivatives; 2) rating agencies; 3) hedge funds. Besides making an empirical contribution to the literature on the politics of international financial regulation, this study also contributes theoretically to this literature by deepening our understanding of the nexus between international regulatory coordination and domestic public opinion.

University of Macau / Faculty of Science and Technology / Department of Computer and Information Science

University of Macau / Faculty of Social Sciences and Humanities / Department of Government and Public Administration

Many hedge funds are believed to yield considerable returns to investors; there is an assumption that suggests hedge funds seem uncorrelated with market fluctuations and have relatively low volatility. In recent years, emerging market hedge funds have experienced a higher capital inflow in periods when the diversification benefits of investing in emerging markets are higher. However, the strategy‟s share of the hedge fund industry‟s total capital flows has decreased significantly during the same periods: this might imply that investors have reallocated capital to other hedge fund strategies. This paper investigates whether emerging markets hedge funds have been as consistent in performance as the benchmark indices by presenting results of comparative analysis of two sample emerging markets hedge fund indices and two standard emerging markets benchmarks performance. The empirical study ranges from the period of January 2006 to December 2010.

Degree project in Business Economics, School of Business and Economics at Linnaeus University, Bachelor thesis Course 2EB00E, spring 2011 Authors: Joakim Söderling 860920, Oscar Carlsson 861021 Supervisor: Michaela Sandell Examiner: Richard Nakamura Title: Aid through trade – An ethnographical minor field study in the Gambia Background: Since Sweden’s fund giving started the overall aim has been to raise people’s living conditions in poorer countries. By having this goal Sweden’s fund giving has changed over the last 50 years during four different eras; Trickle Down, Social Satisfier, Economical Reforms and Governance. Lately, however, criticism regarding whether aid is contributing or not to a less developed country has arisen with questions such as that aid are designed by the fund givers and lack of fieldworkers. Gambia is a development country situated in the poorest area of the poorest continent. The Gambia’s general annual salary is 12,000 Dalasi (3,000 SEC) and poverty is widespread. Entrepreneurship has, however, been noticed as a key-factor for the people and the country’s development. Research question: How should aid for entrepreneurship be designed to promote development in the Gambia? Purpose: To retell the Gambian point of view regarding aid and what type of aid for entrepreneurship that is promoting domestic development in the Gambia. Delimitations: We have chosen to sort out fund organizations of social nature, such as schools and healthcare organizations. We have also delimitated out study to micro-level. Method: We have implemented a qualitative abductive micro-ethnographical field study in which we took the open role as participants as observers. The thesis’ selections are based upon snowball effect and convenience sampling. Conclusions: Aid should be given to women up-country, privately and openly, in the form of material and within a cooperation between fund giver and fund taker. We have also created a model as a recommendation made from our experiences of the Gambian people. Keywords: The Gambia, aid, funds, entrepreneurship, ethnography, development.

Background: Risk management has always been a complex topic, especially when it comes to hedge funds. Since hedge funds are able to utilize many kinds of financial instruments it is difficult to find a risk management strategy that goes well with them. Not much research regarding the Swedish hedge fund industry and its risk management has been done; hence we find it an interesting topic to focus this thesis on. Purpose: The purpose of this thesis is to increase the knowledge of how Swedish hedge fund managers perceive and manage different types of risk and how they construct their portfolios with regards to risk management. We also want to investigate how risk measurements are used when it comes to risk management and how valid they are when applied to hedge funds. Method: In this thesis a combination of exploratory and descriptive research strategies are used. The research method used is the inductive method. A qualitative study is performed as well as a semi-structured interview technique. Conclusion: We conclude that the definitions of risk are ambiguous and differed greatly between the hedge fund managers. The risk in the hedge funds is managed differently depending on manager’s opinion regarding the nature and controllability of risk. We found that all managers agree on that risk is controllable to some degree but that there are always limits and that an uncertainty aspect is at all times present in a portfolio. The fund managers have to use their experience and knowledge in conjunction with an active risk management to run an efficient hedge fund. We conclude that all managers realize the importance of risk management, not only as a tool to achieve superior returns but also as an incentive for investors to choose their hedge fund over others. We conclude that hedge fund managers believe that there is a need for restrictions and limits within their funds. It can be argued that by enforcing and following restrictions and limits the fund has established a foundation to build its risk management and investment philosophy upon. The larger hedge funds relied on strict enforcement of their rules and guidelines and had a high degree of hierarchy; the managers of the smaller hedge funds seemed to have a higher degree of freedom and a less complicated investment process. We also find that the smaller a firm is the less enthusiasm is expressed regarding the usage of the different risk variables in their risk management and it is expressed to be more of a demand from different stakeholders. We conclude also that even though the risk measurements are used mostly in the larger firms one is still aware that they are not able to capture all the risks. Their validity is questioned by all sizes of firms.

Based on previous evidence that there are information heterogeneities in capital markets, three essays including empirical frameworks for examining the information processes that impact portfolio investments and corporate investments was proposed. The first essay considers information channels among mutual fund managers (fund-fund networks), and between holding companies and fund managers (fund-company networks). Results show that (1) fund-fund (fund-company) information networks help in generating positive risk-adjusted returns from holdings in absence of fund-company (fund-fund) networks; (2) fund-company networks create information advantage only when the networks are relatively exclusive. Superior networks seem to pick stocks which outperform beyond the quarter. The second essay examines mutual fund managers tendency to deviate from the strategies of their peers. Results indicate a significantly negative relationship between the managers deviating tendency and fund performance, suggesting that the average fund manager is more likely to make erroneous decisions when they deviate from their peers. The third essay investigates the determinants of target choices in corporate acquisitions. Results reveal the influence of various factors, including information asymmetries, which may drive this behavior, including economic opportunities, anti-takeover regimes, competitive responses to other managers, and acquirers size and book-to-market ratios.

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