Private equity fund

About: Private equity fund is a research topic. Over the lifetime, 4422 publications have been published within this topic receiving 88926 citations.

The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle

Abstract: This article examines the economics of financing small business in private equity and debt markets. Firms are viewed through a financial growth cycle paradigm in which different capital structures are optimal at different points in the cycle. We show the sources of small business finance, and how capital structure varies with firm size and age. The interconnectedness of small firm finance is discussed along with the impact of the macroeconomic environment. We also analyze a number of research and policy issues, review the literature, and suggest topics for future research.

Power, Equity and Commitment in Exchange Networks

Abstract: Exchange theory has the virtue of bringing both power and equity together in a single analytic framework. However, exchange theory has focused largely upon analysis of the dyad, while power and justice are fundamentally social structural phenomena. First, we contrast economic with sociological analysis of dyadic exchange. We conclude that (a) power and equity from social exchange theory carry us beyond economic theory of dyadic exchange; yet (b)for power and equity to be studied effectively, analysis of systems larger than the dyad is needed. Second, we introduce exchange networks to extend power and equity analysis into more macroscopic n-person social structures. Third, a laboratory method is reported for controlled study of exchange networks as bargaining structures. Finally, we present findings which show that (a) power is an attribute of position in a network structure observable in the occupant's behavior, even though the occupant does not know what position or what amount of power s/he possesses; (b) equity or justice concerns constrain the use of that power; (c) emergent interpersonal commitments impede the use of power; and (d) when power is unequally distributed among actors in a network, females form stronger commitments to their exchange partners than do males. In conclusion, we discuss the importance of commitment in distinguishing between economic and social exchange theory.

The Use of Equity Grants to Manage Optimal Equity Incentive Levels

Abstract: We predict and find that firms use annual grants of options and restricted stock to CEOs to manage the optimal level of equity incentives. We model optimal equity incentive levels for CEOs, and use the residuals from this model to measure deviations between CEOs’ holdings of equity incentives and optimal levels. We find that grants of new incentives from options and restricted stock are negatively related to these deviations. Overall, our evidence suggests that firms set optimal equity incentive levels and grant new equity incentives in a manner that is consistent with economic theory.

Private Equity Performance: Returns, Persistence and Capital

Abstract: This paper investigates the performance of private equity partnerships using a data set of individual fund returns collected by Venture Economics. Over the sample period, average fund returns net of fees approximately equal the S&P 500 although there is a large degree of heterogeneity among fund returns. Returns persist strongly across funds raised by individual private equity partnerships. The returns also improve with partnership experience. Better performing funds are more likely to raise follow-on funds and raise larger funds than funds that perform poorly. This relationship is concave so that top performing funds do not grow proportionally as much as the average fund in the market. At the industry level, we show that market entry in the private equity industry is cyclical. Funds (and partnerships) started in boom times are less likely to raise follow-on funds, suggesting that these funds subsequently perform worse. Aggregate industry returns are lower following a boom, but most of this effect is driven by the poor performance of new entrants, while the returns of established funds are much less affected by these industry cycles. Several of these results differ markedly from those for mutual funds.