Information interruption and hedge fund performance: Evidence from lockdown

This paper uses the COVID-19 outbreak as an exogenous shock to study the impact of information interruption on economic activities, particularly on hedge fund performance. Employing a difference-in-differences approach, we find that hedge funds preferring site visits experience a decline in performance and an increase in the failure risk during lockdowns. Additionally, we discover that physical interactions provide valuable soft information, irreplaceable by virtual communication. Our findings highlight the value of face-to-face interaction in information acquisition.