Expected Returns to Stock Investments by Angel Investors in Groups

17 Pages Posted: 16 Sep 2014

See all articles by Ramon P. DeGennaro

Ramon P. DeGennaro

University of Tennessee, Knoxville - Department of Finance

Gerald P. Dwyer

Clemson University; Australian National University (ANU) - Centre for Applied Macroeconomic Analysis (CAMA)

Multiple version iconThere are 3 versions of this paper

Date Written: September 2014

Abstract

Previous research calculates realised internal rates of return on angel investments but does not estimate expected returns. We present the first estimates of expected returns on angel investments by applying a consistent statistical framework to a new data set. Our sample spans 1972 to 2007 with 419 exited investments. Our results suggest that expected returns on stock for angel investors in groups are about 70% per year in excess of the riskfree rate. These expected returns have a large variance and are heavily skewed, with many losses and occasional extraordinarily high returns.

Keywords: Angel Investor, Expected Return, Private Equity

Suggested Citation

DeGennaro, Ramon P. and Dwyer, Gerald P., Expected Returns to Stock Investments by Angel Investors in Groups (September 2014). European Financial Management, Vol. 20, Issue 4, pp. 739-755, 2014, Available at SSRN: https://ssrn.com/abstract=2496680 or http://dx.doi.org/10.1111/eufm.12002

Ramon P. DeGennaro (Contact Author)

University of Tennessee, Knoxville - Department of Finance ( email )

423 Stokely Management Center
Knoxville, TN 37996
United States
865-974-1726 (Phone)
865-974-1716 (Fax)

Gerald P. Dwyer

Clemson University ( email )

Department of Economics
Clemson University
Clemson, SC 29634
United States

Australian National University (ANU) - Centre for Applied Macroeconomic Analysis (CAMA) ( email )

ANU College of Business and Economics
Canberra, Australian Capital Territory 0200
Australia

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