PT  - JOURNAL ARTICLE
AU  - Bing Liang
TI  - The Accuracy of Hedge Fund Returns
AID  - 10.3905/jpm.2003.319889
DP  - 2003 Apr 30
TA  - The Journal of Portfolio Management
PG  - 111--122
VI  - 29
IP  - 3
4099  - https://pm-research.com/content/29/3/111.short
4100  - https://pm-research.com/content/29/3/111.full
AB  - How can the same hedge fund report different performance measures in different places? The answer is that auditing plays an important role in explaining the differences. Although the majority of hedge funds state that they have auditors, a significant proportion of these funds are not effectively audited. Funds that have gone out of business have been particularly less effectively audited than funds that have survived, and audited funds have much smaller return discrepancies than non-audited funds. There is a significantly positive correlation between the fund size and the auditing variable. Large funds tend to be audited and small funds not. Funds listed on exchanges, funds of funds, funds with broad investor representation, funds open to the public, funds invested in a single industrial sector, and unlevered funds have smaller return discrepancies than other funds. These findings suggest a compelling need for hedge fund auditing.