Do hedge funds trade on private information? Evidence from syndicated lending and short-selling

• 成果类型: Article
• 署名作者: Massoud, Nadia; Nandy, Debarshi; Saunders, Anthony; Song, Keke
• 署名单位: York University - Canada; New York University; Dalhousie University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2010.10.002
• 发表日期: 2011
• 页码: 477-499
• 关键词: HEDGE FUNDS; Short-selling; private information; Conflict of interest; syndicated loans

摘要

This paper investigates an important contemporary issue relating to the involvement of hedge funds in the syndicated loan market. In particular, we investigate the potential conflicts of interest that arise when hedge funds make syndicated loans and take short positions in the equity of borrowing firms. We find evidence consistent with the short-selling of the equity of the hedge fund borrowers prior to public announcements of both loan originations and loan amendments. We also find that hedge funds are more likely to lend to highly leveraged, lower credit quality firms, where access to private information is potentially the most valuable and where trading on such information could lead to enhanced profits. Overall, our results have important implications for the current debate regarding regulating the hedge fund industry. (C) 2010 Elsevier B.V. All rights reserved.