“…As the first, large-scale study to examine hedge fund boards and the market for their directors, we contribute to the growing literature that examines the governance mechanisms hedge funds use to manage agency conflicts (e.g., Brown, Goetzmann, Liang, and Schwarz (2008), (2012), Agarwal, Daniel, and Naik (2009), Cumming and Dai (2010), Dimmock and Gerken (2012), Cumming, Dai, and Johan (2013), Ozik and Sadka (2015), and Aiken et al (2015)). For instance, some studies find a positive association between fund misconduct and the quality of internal controls such as signature processes governing cash transfers, pricing and disclosure practices, and the quality of service providers such as auditors or administrators (Cassar and Gerakos (2010), Brown et al (2012)).…”