67 Pages Posted: 27 Mar 2017 Last revised: 22 Jun 2017
Date Written: June 22, 2017
Historically a key advantage of being a public firm was broader access to capital, from a disperse group of shareholders. In recent years, such capital has increasingly become available to private firms as well. We document a dramatic increase over the past twenty years in the number of mutual funds participating in private markets and in the dollar value of these private firm investments. Consistent with the greater availability of capital changing the trade-off between private and public listing status, we find that mutual fund investments enable companies to stay private an average one to two years longer. Mutual funds’ returns on these investments appear to be both economically meaningful and beneficial as a source of diversification, relative to investments in publicly traded firms.
Keywords: private firm, mutual fund, IPO
JEL Classification: G23, G24, G32
Suggested Citation: Suggested Citation
Kwon, Sungjoung and Lowry, Michelle and Qian, Yiming, Mutual Fund Investments in Private Firms (June 22, 2017). Available at SSRN: https://ssrn.com/abstract=2941203 or http://dx.doi.org/10.2139/ssrn.2941203