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Private equity returns and disclosure around the world

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  • Douglas Cumming

    (Schulich School of Business, York University, Toronto, Canada)

  • Uwe Walz

    (Center for Financial Studies, Goethe-Universit&aauml;t Frankfurt/Main, Frankfurt, Germany)

Abstract

To obtain more funds from the institutional investors, private equity (PE) 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 there are significant systematic biases in managers' reporting of fund performance. We find that these biases depend on the accounting and legal environment in a country, and on proxies for the degree of information asymmetry between institutional investors and PE fund managers.

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Bibliographic Info

Article provided by Palgrave Macmillan in its journal Journal of International Business Studies.

Volume (Year): 41 (2010)
Issue (Month): 4 (May)
Pages: 727-754

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Handle: RePEc:pal:jintbs:v:41:y:2010:i:4:p:727-754

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