Information Asymmetries in Private Equity: Reporting Frequency, Endowments, and Governance

55 Pages Posted: 18 Mar 2014 Last revised: 11 Jun 2020

See all articles by Sofia Johan

Sofia Johan

Florida Atlantic University - Finance; University of Aberdeen; Tilburg Law and Economics Center (TILEC)

Minjie Zhang

Odette School of Business - University of Windsor

Multiple version iconThere are 2 versions of this paper

Date Written: March 25, 2014

Abstract

Using PitchBook’s private equity (PE) database of 5,068 PE funds from 44 countries for the 2000-2012 period, we show that endowments are systematically associated with less pronounced differences between unrealized returns and subsequently realized returns. Moreover, endowments receive more frequent reports from their PE funds, implying more stringent governance. We find that higher reporting frequencies from PE funds are correlated with a lower tendency for the limited partners to receive overstated performance reports. These findings persist after controlling for stock market conditions, legal and accounting disclosure environments, legal origins, fund and GP characteristics, limited partnership types, as well as cultural dimensions.

Keywords: Private Equity, Endowments, Financial Reporting, Law and Governance, Culture, Venture Capital

JEL Classification: G22, G23, G24

Suggested Citation

Johan, Sofia A. and Zhang, Minjie, Information Asymmetries in Private Equity: Reporting Frequency, Endowments, and Governance (March 25, 2014). TILEC Discussion Paper No. 2014-016, Available at SSRN: https://ssrn.com/abstract=2409903 or http://dx.doi.org/10.2139/ssrn.2409903

Sofia A. Johan (Contact Author)

Florida Atlantic University - Finance ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

University of Aberdeen ( email )

Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom

Tilburg Law and Economics Center (TILEC) ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands

Minjie Zhang

Odette School of Business - University of Windsor ( email )

401 Sunset Avenue
Windsor, Ontario N9B 3P4
Canada

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