Are novice private equity funds risk-takers? Evidence from a comparison with established funds
| Autor: | Pierre Giot, Ulrich Hege, Armin Schwienbacher |
|---|---|
| Rok vydání: | 2014 |
| Předmět: |
Economics and Econometrics
Strategy and Management Alternative hypothesis media_common.quotation_subject Private equity firm Monetary economics Venture capital Private equity fund Identification (information) Incentive Value (economics) Business Business and International Management Finance Reputation media_common |
| Zdroj: | Journal of Corporate Finance. 27:55-71 |
| ISSN: | 0929-1199 |
| DOI: | 10.1016/j.jcorpfin.2014.02.008 |
| Popis: | This paper explores whether private equity firms that are new to the industry take excessive risks relative to funds from established firms. We use differences between the implicit incentives of managers of experienced and of novice funds as an identification strategy. We find that novice funds invest more slowly than experienced funds, contradicting the risk-taking hypothesis. However, the size of their investments, in value and as fraction of fund size, is larger; this could be consistent with risk-shifting by novice funds but also with alternative hypotheses. We find that the size difference increases over time and is absent from buyout investments. We also find that novice funds tend to underperform most dramatically for early large investments, and that the size of their investments increases after a first successful exit. These and other findings are in conflict with the excessive risk-taking hypothesis, but largely consistent with alternative explanations that emphasize differences in expertise. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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