We document that speed of information dissemination within mutual fund families positively affects fund performance. This suggests that the resultant benefits of higher information precision far outweigh free-riding costs associated with fast internal dissemination. The performance effect is stronger when information travels across managers from different, rather than the same, styles. This is consistent with fast information diffusion aggregating complementary insights that sharpen information precision, but also with fewer free-riding opportunities among managers from different styles. Managers rationally exploit the resultant higher information precision by trading more, relying less on public information, and investing differently than unaffiliated peers.

We provide evidence on the valuation of equity positions by hedge funds. Reported valuations deviate from standard valuations based on closing prices from the Center for Research in Security Prices for roughly 7% of the positions. These equity valuation deviations are positively related to illiquidity and price volatility of the underlying stocks. They respond to past performance and intensify after an advisor starts reporting to a commercial database. Furthermore, advisors with more valuation deviations show a stronger discontinuity in their reported returns around 0, manage a higher fraction of potentially fraudulent funds, report smoother returns, and exhibit an upward spike in their December reported returns.