EconPapers    
Economics at your fingertips  
 

Returns to private equity: idiosyncratic risk does matter!

Elisabeth Müller
Authors registered in the RePEc Author Service: Elisabeth Mueller ()

ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: Owners of private companies often invest a substantial share of their net worth in one company, which exposes them to idiosyncratic risk. For US companies we investigate whether owners require compensation for lack of diversification in the form of higher returns to equity. Exposure to idiosyncratic risk is measured as the share of the owner's net worth invested in the company. Equity returns are measured as the earnings rate and as capital gains. For both returns measures we find a positive and significant influence of exposure to idiosyncratic risk. This paper improves our understanding of returns to private equity.

Keywords: returns to private equity; exposure to idiosyncratic risk; private companies (search for similar items in EconPapers)
JEL-codes: G32 G11 L26 (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-cfn
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/28608/1/611335905.pdf (application/pdf)

Related works:
Journal Article: Returns to Private Equity - Idiosyncratic Risk Does Matter! (2010) Downloads
Working Paper: Returns to private equity: idiosyncratic risk does matter! (2009) Downloads
Working Paper: Returns to Private Equity: Idiosyncratic Risk Does Matter! (2007) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:0429r2

Access Statistics for this paper

More papers in ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().

 
Page updated 2021-04-03
Handle: RePEc:zbw:zewdip:0429r2