Do Private Equity Funds Manipulate Reported Returns? / Gregory W. Brown, Oleg R. Gredil, Steven N. Kaplan.

Format:

Book

Author/Creator:

Brown, Gregory W.

Contributor:

National Bureau of Economic Research.

Gredil, Oleg R.

Kaplan, Steven N.

Series:

Working Paper Series (National Bureau of Economic Research) no. w22493.

NBER working paper series no. w22493

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2016.

Summary:

Private equity funds hold assets that are hard to value. Managers may have an incentive to distort reported valuations if these are used by investors to decide on commitments to subsequent funds managed by the same firm. Using a large dataset of buyout and venture funds, we test for the presence of reported return manipulation. We find evidence that some under-performing managers boost reported returns during times when fundraising takes place. However, those managers are unlikely to raise a next fund, suggesting that investors see through much of the manipulation. In contrast, we find that top-performing funds likely understate their valuations.

Notes:

Print version record

August 2016.