Skin or Skim? Inside Investment and Hedge Fund Performance

• 成果类型: Article
• 署名作者: Gupta, Arpit; Sachdeva, Kunal
• 署名单位: New York University; University of Michigan System; University of Michigan
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2024.4984
• 发表日期: 2025
• 关键词: HEDGE FUNDS; OWNERSHIP; Managerial skill; alpha

摘要

Hedge fund managers contribute substantial personal capital, or skin in the game, into their funds. Although these allocations may better align incentives, managers may also strategically allocate their private capital in ways that negatively affect outside investors. We find that funds with more inside investment outperform other funds within the same family. This relationship is driven by managerial decisions to invest their own capital in their least-scalable strategies and restrict the entry of new outsider capital into these funds. Our results suggest that insider capital may work as a rent-extraction mechanism at the expense of fund participation of outside investors.