Change You Can Believe In? Hedge Fund Data Revisions

Journal Article (Journal Article)

We analyze the reliability of voluntary disclosures of financial information, focusing on widely-employed publicly-available hedge fund databases. Tracking changes to statements of historical performance recorded between 2007 and 2011, we find that historical returns are routinely revised. These revisions are not merely random or corrections of earlier mistakes; they are partly forecastable by fund characteristics. Funds that revise their performance histories significantly and predictably underperform those that have never revised, suggesting that unreliable disclosures constitute a valuable source of information for investors. These results speak to current debates about mandatory disclosures by financial institutions to market regulators.

Full Text

Duke Authors

Cited Authors

  • Patton, AJ; Ramadorai, T; Streatfield, M

Published Date

  • June 1, 2015

Published In

Volume / Issue

  • 70 / 3

Start / End Page

  • 963 - 999

Electronic International Standard Serial Number (EISSN)

  • 1540-6261

International Standard Serial Number (ISSN)

  • 0022-1082

Digital Object Identifier (DOI)

  • 10.1111/jofi.12240

Citation Source

  • Scopus