Manipulation and manipulation-free Performance Measures for Hedge funds

Performance Measures manipulation assumes a key role in the alternative investment context. Performance Measurement Manipulation consists in the managers ability to alter the performance measurement by using several techniques that do not add value to the fund, but only enhance the final bogus results. The objective of this research is to understand, through an ex-post analysis, if the performance measures analyzed, divided into manipulation and manipulation-free ones, may have been manipulated. For answering to this question, we consider hedge fund monthly returns for 11 strategies from EDHEC-risk Institute database. From these data, performance measures have been calculated and, through a rank correlation analysis, we try to highlight if fund managers have been encouraged to take advantages employing manipulable measures to alter the fund performance.