Hedge Funds and Risk-Decoupling: The Empty Voting Problem in the European Union

Georg Ringe

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

The law must remain adaptive and responsive to the constantly changing challenges of our society and our business life. One of the most pressing challenges of the past years is the emergence of alternative investment funds, in particular hedge funds, which masterfully exploit the traditional categories of corporate law, financial derivatives, and risk management. This Article is only concerned with the first of these two forms— negative decoupling.9 It looks at the various forms of negative riskdecoupling strategies and tries to shed light on their overall desirability. Three distinct theoretical perspectives are used as an analytical framework to examine the vast challenges of risk-decoupling: (1) a classical agency costs approach; (2) an information costs perspective; and (3) a view from corporate finance. This Article argues that shareholders with hedged risk exposure do not correspond to the traditional market expectations of shareholders. Based on the insight developed from these policy perspectives, this article develops regulatory reform proposals, particularly with regard to the EU context.
Original languageEnglish
JournalSeattle University. Law Review
Volume36
Issue number2
Pages (from-to)1027-1115
ISSN1078-1927
Publication statusPublished - 2013

Cite this

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Hedge Funds and Risk-Decoupling : The Empty Voting Problem in the European Union. / Ringe, Georg.

In: Seattle University. Law Review, Vol. 36, No. 2, 2013, p. 1027-1115.

Research output: Contribution to journalJournal articleResearchpeer-review

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