Performance Persistence in Private Equity Funds
Korea University - Department of Finance
March 1, 2012
Performance persistence in the private equity industry is not long-lived. Current fund performance is positively and significantly associated with the performance of the first follow-on fund, but the magnitude of persistence substantially declines afterwards. Persistence, if any, is largely driven by relatively underperforming funds. Furthermore, excessive fund growth, conditional on past performance, erodes persistence, and the commonality of market conditions between two successive funds partially explains performance persistence. The findings are not conclusive about whether general partners have proprietary skills, but have important implications for the capital allocation decisions of investors in the private equity industry.
Number of Pages in PDF File: 51
Keywords: Private Equity, Performance, Persistence
JEL Classification: G23, G24working papers series
Date posted: October 4, 2010 ; Last revised: March 1, 2012
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo1 in 0.516 seconds