Hedge funds and unconscious fantasy

Accounting, Auditing & Accountability Journal

Volumn 25, Issue 8, 2012, Pages 1244-1265

  Eshraghi, Arman ^a   Taffler, Richard ^b  

^a UNIVERSITY OF EDINBURGH BUSINESS SCHOOL   (United Kingdom)

^b UNIVERSITY OF WARWICK   (United Kingdom)

Author keywords

Alternative investments; Emotional finance; Financial risk; Financial services; Investor psychology; Media portrayal; Phantastic objects

Indexed keywords

EID: 84868599224     PISSN: 09513574     EISSN: None     Source Type: Journal    
DOI: 10.1108/09513571211275461     Document Type: Article

References (99)

1. Ackermann, C., McEnally, R. and Ravenscraft, D. (1999), “The performance of hedge funds: risk, return and incentives”, The Journal of Finance, Vol. 54 No. 3, pp. 833-74.
2. Agarwal, V., Boyson, N.M. and Naik, N.Y. (2009), “Hedge funds for retail investors? An examination of hedged mutual funds”, Journal of Financial and Quantitative Analysis, Vol. 44 No. 2, pp. 273-305.
3. Aggarwal, R.K. and Jorion, P. (2012), “Is there cost to transparency?”, Financial Analysts Journal, Vol. 68 No. 2, pp. 108-23.
4. Aitken, A.L., Clifford, C.P. and Ellis, J. (2011), “Out of the dark: hedge fund reporting biases and commercial databases”, available at: SSRN: http://ssrn.com/abstract=1519914.
5. Akerlof, G. (1970), “The market for ‘lemons’: quality uncertainty and market mechanism”, The Quarterly Journal of Economics, Vol. 84 No. 3, pp. 488-500.
6. Anderson, J. (2005), “If I only had a hedge fund”, New York Times, March 27.
7. Anderson, J. and Creswell, J. (2007), “Hedge fund managers leading in race for riches”, New York Times, April 23.
8. Arvedlund, E. (2009), Madoff, The Man Who Stole $65 Billion, Penguin Books, London.
9. Baks, K., Metrick, A. and Wachter, J. (2001), “Should investors avoid all actively managed mutual funds? A study in Bayesian performance evaluation”, Journal of Finance, Vol. 56, pp. 45-85.
10. Barberis, N. and Huang, M. (2008), “Stocks as lotteries: the implications of probability weighting for security prices”, American Economic Review, Vol. 98 No. 55, pp. 2066-100.
11. Bernard, C. and Boyle, P. (2009), “Mr Madoff's amazing returns: an analysis of the split-strike conversion strategy”, Journal of Derivatives, Vol. 17 No. 1, pp. 62-76.
12. Bion, W.R. (1952), “Group dynamics: a re-view”, The International Journal of Psychoanalysis, Vol. 33, pp. 235-47.
13. Bion, W.R. (1961), Experiences in Groups, Basic Books, New York, NY.
14. Birger, J. (2008), “America's hottest investor”, Fortune, May 27.
15. Bollen, N.P.B. and Pool, V.K. (2009), “Do hedge fund managers misreport returns? Evidence from the pooled distribution”, Journal of Finance, Vol. 64 No. 5, pp. 2257-88.
16. Brooks, J. (1973), The Go-Go Years: The Drama and Crashing Finale of Wall Street's Bullish 60s, Allworth Press, New York, NY.
17. Brown, S.J. and Schwarz, C. (2011), “The impact of mandatory hedge fund portfolio disclosure”, available at: http://ssrn.com/abstract=1683628.
18. Brown, S.J., Goetzmann, W.N., Liang, B. and Schwartz, C. (2012), “Trust and delegation”, Journal of Financial Economics, Vol. 103 No. 2, pp. 224-34.
19. Cadwalladr, C. (2007), “Close to the hedge”, The Observer, July 29.
20. Caldwell, C. (2009), “Bernie Madoff's life of make-believe”, Financial Times, March 13.
21. Chan, N., Getmansky, M., Haas, S. and Lo, A. (2006), “Systematic risk and hedge funds”, in Carey, M. and Stulz, R.M. (Eds), The Risks of Financial Institutions, University of Chicago Press, Chicago, IL, pp. 235-330.
22. Chincarini, L.B. (2008), “A case study on risk management: lessons from the collapse of Amaranth Advisors LLC”, Journal of Applied Finance, Vol. 18 No. 1, pp. 152-74.
23. Clauss, P., Roncalli, T. and Weisang, G. (2009), “Risk management lessons from Madoff Fraud”, in Choi, J.J. and Papaioannou, M.G. (Eds), Credit, Currency, or Derivatives: Instruments of Global Financial Stability or Crisis?, International Finance Review, Vol. 10, Emerald Group Publishing, Bingley, pp. 505-43.
24. Cooper, M.J., Dimitrov, O. and Rau, P.R. (2001), “A Rose.com by any other name”, Journal of Finance, Vol. 56 No. 6, pp. 2371-88.
25. Cramer, J.J. (2006), “After Amaranth”, New York Magazine, October 2.
26. Dichev, I.D. and Yu, G. (2011), “Higher risk, lower returns: what hedge fund investors really earn”, Journal of Financial Economics, Vol. 100 No. 2, pp. 248-63.
27. Eder, S. (2011), “Hedge funds gird to fight proposals on disclosure”, Wall Street Journal, February 3.
28. Fairclough, N. (2001), Language and Power, Pearson Education, Harlow.
29. Fairclough, N. and Holes, C. (1995), Critical Discourse Analysis: The Critical Study of Language, Longman, Harlow.
30. Falcone, P.A. (2008), Statement before the US House Committee on Oversight and Government Reform, November 13.
31. Farrell, C. (2002), “Before you jump into a hedge fund”, Business Week, May 17.
32. Fishman, S. (2011), “The Madoff tapes”, New York Magazine, February 27.
33. Ford, J. and Jones, S. (2010), “A tricky pick”, Financial Times, June 10.
34. Foster, D.P. and Young, H.P. (2007), “The hedge fund game: incentives, excess returns, and piggy-backing”, Department of Economics Working Paper 378, University of Oxford, Oxford.
35. French, K.R. (2008), “Presidential address: the cost of active trading”, Journal of Finance, Vol. 63 No. 4, pp. 1537-73.
36. Freud, S. (1911), “Formulations regarding the two principles of mental functioning”, The Standard Edition of The Complete Psychological Works of Sigmund Freud, Vol. 12, Hogarth, London.
37. Fung, W. and Hsieh, D. (2009), “Measurement biases in hedge fund performance data: an update”, Financial Analysts Journal, Vol. 65 No. 3, pp. 1-3.
38. Gabriel, Y. (2008), Organizing Words: A Critical Thesaurus for Social and Organization Studies, Oxford University Press, New York, NY.
39. Geithner, T.F. (2008), “Systemic risk and financial markets”, Testimony before the House Committee on Financial Services, July 24.
40. Gelles, D. and Tett, G. (2011), “From behind bars Madoff spins his story”, Financial Times Magazine, April 9/10.
41. Gregoriou, G. (2006), Funds of Hedge Funds: Performance, Assessment, Diversification, and Statistical Properties, Butterworth-Heinemann, Oxford.
42. Gregoriou, G. and Lhabitant, F. (2009), “Madoff: a riot of red flags”, available at: http://ssrn.com/abstract=1335639.
43. Griffin, J. and Xu, J. (2009), “How smart are the smart guys? A unique view from hedge fund stock holdings”, The Review of Financial Studies, Vol. 22 No. 7, pp. 2331-70.
44. Hedge Fund Research (2009), “Year-end 2008 report”, available at: www.hedgefundresearch.com.
45. Hedge Fund Research (2012), “Year-end 2011 report”, available at: www.hedgefundresearch.com.
46. Ibbotson, R.G. and Chen, P. (2011), “The ABCs of hedge funds: alphas, betas and costs”, Financial Analyst Journal, Vol. 67 No. 1, pp. 15-25.
47. Ineichen, A.M. (2003), Absolute Returns – Risk and Opportunities of Hedge Fund Investing, Wiley, New York, NY.
48. Jagannathan, R., Malakhov, A. and Novikov, D. (2010), “Do hot hands exist among hedge fund managers? An empirical evaluation”, Journal of Finance, Vol. 65 No. 1, pp. 217-55.
49. Janis, I.L. (1982), Groupthink, 2nd ed., Houghton Mifflin, Boston, MA.
50. Jones, S. (2012), “Hedge funds lobby SEC over secrecy rule”, Financial Times, January 16.
51. Kaal, W. (2009), “Hedge fund valuation: retailization, regulation and investor suitability”, 28th Annual Review Banking & Financial Law, p. 581.
52. Kellaway, L. (2008), “Go short on letters to investors”, Financial Times, November 2.
53. Kindleberger, C.P. and Aliber, R.Z. (2011), Manias, Panics, and Crashes, 6th ed., Palgrave Macmillan, New York, NY.
54. Kirsner, D. (1990), “Illusion and the stock market crash: some psychoanalytic aspects”, Free Associations, Vol. 1T, pp. 31-59.
55. Klein, M. (1975), Love, Guilt and Reparation, and Other Works: 1921-1945, Karnac Books, London.
56. Kosowski, R., Naik, N.Y. and Teo, M. (2007), “Do hedge funds deliver alpha? A Bayesian and bootstrap analysis”, Journal of Financial Economics, Vol. 84 No. 1, pp. 229-64.
57. Langevoort, D.C. (2009), “The SEC and the Madoff scandal: three narratives in search of a story”, Michigan State Law Review, pp. 899-914.
58. Llam, R.M. (1999), “Portfolios of alternative assets: why not 100% hedge funds?”, The Journal of Investing, Vol. 8 No. 4, pp. 87-97.
59. Lo, A. (2008), Statement before the US House Committee on Oversight and Government Reform, November 13.
60. Lowenstein, R. (2000), When Genius Failed: The Rise and Fall of Long-Term Capital Management, Random House, New York, NY.
61. Mackintosh, J. (2009), “Hedge fund investors have a great chance to cut fees”, Financial Times, February 2.
62. Malkiel, B.G. and Saha, A. (2005), “Hedge funds: risk and return”, Financial Analysts Journal, Vol. 61 No. 6, pp. 80-8.
63. Markopolos, H. and Casey, F. (2010), No One Would Listen: A True Financial Thriller, Wiley, New York, NY.
64. Masters, B. (2010), “HSBC had Madoff warnings in 2001”, Financial Times, December 6.
65. Masters, B., Murphy, M. and Scannell, K. (2011), “J P Morgan risk officer warned on Madoff”, Financial Times, February 3.
66. Michel, J.B., Shen, Y.K., Aiden, A.P., Veres, A., Gray, M.K., Brockman, W., The Google Books Team, Pickett, J.P., Hoiberg, D., Clancy, D., Norvig, P., Orwant, J., Pinker, S., Nowak, M.A. and Aiden, E.L. (2011), “Quantitative analysis of culture using millions of digitized books”, Science, Vol. 331 No. 6014, pp. 176-82.
67. Modigliani, L. (1999), “Quantitative aspects of analyzing risk – are hedge funds worth it?”, in Lake, R.A. (Ed.), Evaluating and Implementing Hedge Fund Strategies, 2nd ed., Euromoney Institutional Investor, London, pp. 326-9.
68. Moore, B.E. and Fine, B.D. (1990), Psychoanalytic Terms and Concepts, The American Psychoanalytic Association, New York, NY.
69. Niederhoffer, V. (1998), The Education of a Speculator, Wiley, New York, NY.
70. Ocrant, M. (2001), “Madoff tops charts; skeptics ask how”, MAR/Hedge (RIP), 89, May.
71. Ozik, G. and Sadka, R. (2010), “Does recognition explain the media-coverage discount? Contrary evidence from hedge funds”, available at: http://ssrn.com/abstract=1563703.
72. Patton, A.J., Ramadorai, T. and Streatfield, M. (2011), “The reliability of voluntary disclosures: evidence from hedge funds”, available at: http://ssrn.com/abstract=1934543.
73. Paulson, J. (2008), Statement before the US House Committee on Oversight and Government Reform, November 13.
74. Salmon, W.C. (1990), “Psychoanalytic theory and evidence”, in Hook, S. (Ed.), Psychoanalysis, Scientific Method and Philosophy, Transaction Publishers, New Brunswick, NJ, pp. 252-67, (first published 1959).
75. Scannell, K. (2011), “Madoff Trustee collects $1bn from hedge fund”, Financial Times, July 28.
76. Schneeweis, T., Spurgin, R. and Karavas, V. (2000), Alternative Investments in the Institutional Portfolio, Alternative Investment Management Association, London.
77. Seal, M. (2009), “Madoff's world”, Vanity Fair, April.
78. Seal, M. and Squillari, E. (2009), “Hello, Madoff!”, Vanity Fair, June.
79. Securities and Exchange Commission (2011), “SEC approves confidential private fund risk reporting”, October 26, available at: www.sec.gov/news/press/2011/2011-226.htm.
80. Sender, H. (2008), “Members of the ‘club’ who won the allegiance of colleagues”, Financial Times, December 13.
81. Sender, H. and Kirchgaessner, S. (2008), “Top hedge fund chiefs blame the system for crisis”, Financial Times, November 14.
82. Simons, J. (2008), Statement before the US House Committee on Oversight and Government Reform, November 13.
83. Soros, G. (2008), Statement before the US House Committee on Oversight and Government Reform, November 13.
84. Spence, C. (2007), “Social and environmental reporting and hegemonic discourse”, Accounting, Auditing & Accountability Journal, Vol. 20 No. 6, pp. 855-82.
85. Stambaugh, R. (2003), “Inference about survivors”, working paper, Wharton School, University of Pennsylvania, Philadelphia, PA.
86. Statman, M. (2009), “Regulating financial markets: protecting us from ourselves and others”, Financial Analysts Journal, Vol. 65 No. 3, pp. 22-31.
87. Stein, C. (2009), “Heebner slumps for second year on losses by insurers”, Wal-Mart, Bloomberg.com, July 13.
88. Stewart, K. (2002), “Golden in Greenwich”, Vanity Fair, October.
89. Story, L. (2009), “Hedge funds unhinged”, New York Times, January 18.
90. Stulz, R. (2007), “Hedge funds: past, present, and future”, Journal of Economic Perspectives, Vol. 21 No. 2, pp. 175-94.
91. Taffler, R.J. and Tuckett, D. (2005), “A psychoanalytic interpretation of dot.com stock valuations”, available at: http://ssrn.com/abstract=67663.
92. Taffler, R.J. and Tuckett, D. (2010), “Emotional finance: the role of the unconscious in financial decisions”, in Baker, K.H. and Nofsinger, J.R. (Eds), Behavioral Finance, Wiley, New York, NY, pp. 95-112.
93. Thornton, E. (2008), “The Midas of misery”, Business Week, April 24.
94. Timmons, H. (2006), “Peace, love and hedge funds”, International Herald Tribune, June 9.
95. Tuckett, D. (2009), “Addressing the psychology of financial markets”, Economics: The Open-Access, Open-Assessment E-Journal, Vol. 3, pp. 2009-40.
96. Tuckett, D. (2011), Minding the Markets: An Emotional Finance View of Financial Instability, Palgrave Macmillan, Basingstoke.
97. Tuckett, D. and Taffler, R.J. (2008), “Phantastic objects and the financial market's sense of reality: a psychoanalytic contribution to the understanding of stock market instability”, International Journal of Psychoanalysis, Vol. 89 No. 2, pp. 389-412.
98. White, B. (2007), “The billion dollar boffin”, Financial Times, April 27.
99. Zuckerman, G., Strasburg, J. and Lattman, P. (2009), “Renaissance waives fees on fund that gave up 12%”, Wall Street Journal, January 5.