Private Equity Returns and Disclosure Around the World

Cumming, Douglas J.; Walz, Uwe

doi:10.2139/ssrn.514105

Private Equity Returns and Disclosure Around the World

EFA 2004 Maastricht, EEA 2004 Madrid, EFM 2005 Madrid, Journal of International Business Studies, forthcoming 2009

43 Pages Posted: 5 Mar 2004 Last revised: 8 Sep 2016

See all articles by Douglas J. Cumming

Uwe Walz

Goethe University Frankfurt - Institute of Economics; Center For Financial Studies (CFS); Leibniz Institute for Financial Research SAFE

There are 2 versions of this paper

Date Written: March 5, 2004

Abstract

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

Cumming, Douglas J. and Walz, Uwe, Private Equity Returns and Disclosure Around the World (March 5, 2004). EFA 2004 Maastricht, EEA 2004 Madrid, EFM 2005 Madrid, Journal of International Business Studies, forthcoming 2009, Available at SSRN: https://ssrn.com/abstract=514105 or http://dx.doi.org/10.2139/ssrn.514105