The Differential Effects of the 13f Disclosure Rule on Institutional Investors

Date of Award

Spring 2022

Document Type


Degree Name

Doctor of Philosophy (PhD)



First Advisor

Thomas, Jacob


The 13f disclosure rule, which requires institutional investors to disclose mainly stock investments, has garnered significant attention in recent years. Some believe that copycatting activities from outside investors can harm disclosing investors’ returns, while others argue that copycatting is non-existent due to the 13f reporting delay, and that even if copycatting did exist, it would benefit disclosing investors’ returns. Do copycats harm institutions’ returns? First, I find that due to the narrow definition of the 13f rule, mainly stock investors (who comprise about 15% of institutional assets) must disclose on 13fs and so mainly stock investors are exposed to potential copycats. The 13f rule thus creates a differential disclosure environment among institutions simply based on the instruments used; a small-cap value manager would have to disclose all of its portfolio (assuming it meets the 13f threshold), while a global macro hedge fund that uses only derivatives can keep its portfolio secret. Next, I find that a subset of stock investors – long-term stock investors – are the primary target of copycats due to lower replication risk. For example, top-performing long-term stock investors, including hedge funds and pension funds, face significant market reactions to disclosures of newly purchased stock. Lastly, I show in portfolio simulations that while short-term investors may benefit from the positive market reactions caused by outside copycats, long-term investors do not necessarily benefit and may even be harmed. I test and confirm these predictions in a sample of hedge funds and pension funds. Overall, my study suggests that long-term stock investors are being harmed on a risk-adjusted return basis under the 13f rule and aims to inform regulators as they consider whether to expand 13f disclosure.

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