Risk and Return in Private Equity

Handbook of the Economics of Corporate Finance, Vol 1: Private Equity and Entrepreneurial Finance, Forthcoming

130 Pages Posted: 2 Aug 2022 Last revised: 24 May 2023

See all articles by Arthur G. Korteweg

Arthur G. Korteweg

University of Southern California - Marshall School of Business

Date Written: August 3, 2022

Abstract

This chapter is both a primer on estimation methods for assessing risk and return in private equity and a survey of the empirical literature. Most private equity investments are made by private funds that raise capital from institutions and wealthy individuals. Performance data is collected either at the fund-level or at the level of the underlying investments. These data sources have distinct econometric issues, and the chapter describes empirical methods developed for each type of data. The risk and return properties of the small segment of publicly traded vehicles is also considered. The chapter concludes with directions for future research.

Keywords: private equity, buyout, venture capital, risk, return, performance, risk-adjustment, beta, alpha

Suggested Citation

Korteweg, Arthur G., Risk and Return in Private Equity (August 3, 2022). Handbook of the Economics of Corporate Finance, Vol 1: Private Equity and Entrepreneurial Finance, Forthcoming , Available at SSRN: https://ssrn.com/abstract=4170135

Arthur G. Korteweg (Contact Author)

University of Southern California - Marshall School of Business ( email )

3670 Trousdale Parkway
Los Angeles, CA 90089
United States

HOME PAGE: http://www.marshall.usc.edu/personnel/arthur-korteweg

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