Dodd-Franking the Hedge Funds

Douglas Cumming, Na Dai, Sofia Johan

Research output: Contribution to journalArticlepeer-review

11 Citations (Scopus)


This paper analyzes hedge fund performance, risk, and fund flows before and after the implementation of the Dodd–Frank Act. The data indicates that, relative to non-US hedge funds, US hedge funds that are regulated under Dodd–Frank have lower fund alphas in the post-Dodd–Frank implementation period, both statistically and economically significant, while the evidence on its effect on risk (standard deviations and idiosyncratic risk) is mixed. We find evidence that there is more fund outflow (or less fund inflow) for certain US hedge fund strategies after the implementation of Dodd–Frank. We show some differences in these findings dependent on fund size and strategy. The findings are robust to difference-in-differences analyses comparing US to non-US funds.
Original languageEnglish
Article number105216
Number of pages16
JournalJournal of Banking and Finance
Early online date21 Sept 2017
Publication statusPublished - Oct 2020

Bibliographical note

Funding Information:
We owe thanks to the seminar participants at the Goethe University of Frankfurt, SUNY Albany, York University, the Securities and Exchange Commission, the 7th IFABS Conference on ``The Future of Financial Institutions and Markets: Navigating the Challenges Ahead'' in Hangzhou, China, and the 2017 American Law and Economics Association Annual Meeting at Yale University. Na Dai owes thanks the Center for Institutional Investment Management at SUNY ? Albany for data support. Douglas Cumming and Sofia Johan owe thanks to the Social Sciences and Humanities Research Council of Canada for financial support. This paper was awarded the 2015 Best Paper Award from the Alternative Investment Management Association.

Publisher Copyright:
© 2017

Copyright 2020 Elsevier B.V., All rights reserved.


  • Hedge funds
  • Dodd-Frank
  • Law and finance
  • RISK
  • LAW
  • Dodd–Frank


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