Its not exactly known what the function of the strangely shaped hammer head is. An interesting observation on two species of hammerhead shark, Sphyrna tiburo and Sphyrna zygaena, was made in 1977 by Thomson and Simanek in American Zoologist (vol 17, p 350).
S. tiburo has the larger head area and a smaller pectoral fin area, but the combined area of head and pectoral fins is virtually the same in the two species. That fact, in the opinion of the authors, confirms the importance of both the hammer and pectoral fins as planing surfaces. The "wings" that jut out on either side of the shark's head act to create the hammer shape act as hydrofoils, aiding the shark's movement and adding extra lift. This enables the shark to bank and make rapid vertical movements more quickly. An additional advantage is that the eyes of a hammerhead shark are at either end of these wings and this could enhance the shark's binocular vision, allowing it to gauge distance more accurately.