Do Private Equity Funds Manipulate Reported Returns?

Gregory W. Brown, Oleg R. Gredil and Steven Kaplan ()

No 22493, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Private equity funds hold assets that are hard to value. Managers may have an incentive to distort reported valuations if these are used by investors to decide on commitments to subsequent funds managed by the same firm. Using a large dataset of buyout and venture funds, we test for the presence of reported return manipulation. We find evidence that some under-performing managers boost reported returns during times when fundraising takes place. However, those managers are unlikely to raise a next fund, suggesting that investors see through much of the manipulation. In contrast, we find that top-performing funds likely understate their valuations.

JEL-codes: G23 G24 G30 (search for similar items in EconPapers)
Date: 2016-08
New Economics Papers: this item is included in nep-cfn and nep-fmk
Note: CF
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Citations: View citations in EconPapers (4)

Published as Gregory W. Brown & Oleg R. Gredil & Steven N. Kaplan, 2018. "Do private equity funds manipulate reported returns?," Journal of Financial Economics, .

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Related works:
Journal Article: Do private equity funds manipulate reported returns? (2019)
Working Paper: Do Private Equity Funds Manipulate Reported Returns? (2016)
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