Bridge over ocean
1 March 2012 Financial Analysts Journal Volume 68, Issue 2

Is There a Cost to Transparency?

  1. Rajesh K. Aggarwal
  2. Philippe Jorion

Conducting the first direct tests for the cost of private transparency, the authors examined whether a willingness to offer transparency to investors is beneficial or costly in terms of hedge fund returns. Transparency is implicit when a fund accepts managed accounts because such accounts are directly controlled by investors. Overall, the authors found no evidence that transparency harms fund returns. They also found no support for concerns that managers offering transparency suffer from selection bias.

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