Has the science of finance advanced because of the the presence of hedge funds? Has our knowledge of finance improved because of hedge funds? These are interesting questions to consider not because it may tell us something about hedge funds, but because it may tell us something about the advancement of science and the development of knowledge in finance. Knowledge improves through its general dissemination. Private knowledge generally does not advance science. So the question is whether hedge funds help with the dissemination of financial knowledge.
Of course, there are hedge fund managers who have engaged and published research, but the broader question is whether they effect the advancement of finance knowledge. This is less clear; however, we think hedge funds do play four different roles to help advance knowledge.