Private Equity Returns and Disclosure Around the World
43 Pages Posted: 5 Mar 2004 Last revised: 8 Sep 2016
Date Written: March 5, 2004
To obtain more funds from the institutional investors, private equity fund managers may report inflated valuations of private investee companies that are not yet sold. However, such overvaluations may result in a reputational cost when those investments are realized. Using evidence from 39 countries, we show that significant systematic biases exist in the reporting of fund performance, and that these biases depend on the degree of accounting conservatism and the strength of the legal environment in a country, and on proxies for the degree of information asymmetry between institutional investors and private equity fund managers.
Keywords: International Financial Reporting, Private Equity and Portfolio Diversification, Venture Capital
JEL Classification: G24, G28, G31, G32, G35
Suggested Citation: Suggested Citation