Reporting Bias in Private Equity: Reporting Frequency, Endowments, and Governance

65 Pages Posted: 21 Aug 2016

See all articles by Sofia Johan

Sofia Johan

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

Minjie Zhang

Odette School of Business - University of Windsor

Date Written: August 19, 2016

Abstract

Using PitchBook’s private equity (PE) database of 5,068 PE funds from 44 countries for the 2000 to 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 environments and origins, fund and GP characteristics, PE fund types, as well as cultural dimensions.

Keywords: Private Equity, Reporting, Performance

Suggested Citation

Johan, Sofia A. and Zhang, Minjie, Reporting Bias in Private Equity: Reporting Frequency, Endowments, and Governance (August 19, 2016). 29th Australasian Finance and Banking Conference 2016. Available at SSRN: https://ssrn.com/abstract=2826839 or http://dx.doi.org/10.2139/ssrn.2826839

Sofia A. Johan (Contact Author)

Florida Atlantic University - Finance ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

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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