Open-end organizational structures and limits to arbitrage
We provide evidence that open-end organizational structures undermine incentives for asset managers to attack long-term mispricing. We compare open-end funds with closed-end funds. Closed-end funds purchase more underpriced stocks than do open-end funds, especially if the stocks involve high arbitra...
| Main Authors: | , |
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| Format: | Journal article |
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Oxford University Press
2017
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| _version_ | 1826274702189920256 |
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| author | Giannetti, M Kahraman, C |
| author_facet | Giannetti, M Kahraman, C |
| author_sort | Giannetti, M |
| collection | OXFORD |
| description | We provide evidence that open-end organizational structures undermine incentives for asset managers to attack long-term mispricing. We compare open-end funds with closed-end funds. Closed-end funds purchase more underpriced stocks than do open-end funds, especially if the stocks involve high arbitrage risk. We then show that hedge funds with highshare restrictions having a lower degree of open-endedness also trade against long-term mispricing to a larger extentthan do other hedge funds. Our analysis suggests that open-end organizational structures are not conducive to long-term risky arbitrage. |
| first_indexed | 2024-03-06T22:47:29Z |
| format | Journal article |
| id | oxford-uuid:5daaacd5-dd28-4a3a-b459-2218029af8b0 |
| institution | University of Oxford |
| last_indexed | 2024-03-06T22:47:29Z |
| publishDate | 2017 |
| publisher | Oxford University Press |
| record_format | dspace |
| spelling | oxford-uuid:5daaacd5-dd28-4a3a-b459-2218029af8b02022-03-26T17:35:50ZOpen-end organizational structures and limits to arbitrageJournal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:5daaacd5-dd28-4a3a-b459-2218029af8b0Symplectic Elements at OxfordOxford University Press2017Giannetti, MKahraman, CWe provide evidence that open-end organizational structures undermine incentives for asset managers to attack long-term mispricing. We compare open-end funds with closed-end funds. Closed-end funds purchase more underpriced stocks than do open-end funds, especially if the stocks involve high arbitrage risk. We then show that hedge funds with highshare restrictions having a lower degree of open-endedness also trade against long-term mispricing to a larger extentthan do other hedge funds. Our analysis suggests that open-end organizational structures are not conducive to long-term risky arbitrage. |
| spellingShingle | Giannetti, M Kahraman, C Open-end organizational structures and limits to arbitrage |
| title | Open-end organizational structures and limits to arbitrage |
| title_full | Open-end organizational structures and limits to arbitrage |
| title_fullStr | Open-end organizational structures and limits to arbitrage |
| title_full_unstemmed | Open-end organizational structures and limits to arbitrage |
| title_short | Open-end organizational structures and limits to arbitrage |
| title_sort | open end organizational structures and limits to arbitrage |
| work_keys_str_mv | AT giannettim openendorganizationalstructuresandlimitstoarbitrage AT kahramanc openendorganizationalstructuresandlimitstoarbitrage |