Download this Paper Open PDF in Browser

Mutual Fund Investments in Private Firms

67 Pages Posted: 27 Mar 2017 Last revised: 22 Jun 2017

Sungjoung Kwon

Drexel University - Bennett S. LeBow College of Business

Michelle Lowry

Drexel University

Yiming Qian

University of Iowa - Department of Finance

Date Written: June 22, 2017

Abstract

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

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

Sungjoung Kwon

Drexel University - Bennett S. LeBow College of Business ( email )

101 N. 33rd St.
Philadelphia, PA 19104
United States

Michelle B. Lowry (Contact Author)

Drexel University ( email )

Philadelphia, PA 19104
United States
215-895-6070 (Phone)

Yiming Qian

University of Iowa - Department of Finance ( email )

S382 Pappajohn Building
Iowa City, IA 52242
United States
319-335-0934 (Phone)
319-335-3690 (Fax)

Paper statistics

Downloads
328
Rank
77,112
Abstract Views
912