Private Equity Fund Size, Investment Size, and Value Creation

Mark Humphery‐Jenner

51 citations0/0 files storedEuropean Finance Review

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Private Equity and Venture Capital Financial Markets and Investment Strategies Corporate Finance and Governance

Abstract

Abstract This paper examines why large private equity (PE) funds earn lower returns. The article argues that large PE funds are suited to making large investments and small PE funds are suited to nurturing start-ups. Thus, the suboptimal investment in small companies is one driver of the size effect in PE. A theoretical model and empirical results from a sample of 1,222 funds in the USA support this prediction. The largest 25% of PE funds earn internal rates of return of 5.17% when they invest in the largest 25% of companies but only −2.98% when they invest in the smallest 25%. This suggests that investment size is a driver of the size effect in PE.

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Citations in this library

Citation map →

Stored only when both papers are in the corpus — 51 citations exist upstream.

References

1986Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers 1996Agency costs of free cash flow, corporate finance, and takeovers 1981Risk Reduction as a Managerial Motive for Conglomerate Mergers 1989Boards of Directors and Corporate Financial Performance: A Review and Integrative Model 2004Firm size and the gains from acquisitions 1991Venture Capitalist Certification in Initial Public Offerings 1999Corporate Cash Reserves and Acquisitions 1995Optimal Investment, Monitoring, and the Staging of Venture Capital

Cited by

2019Do mutual fund networks affect corporate social responsibility? Evidence from China 2021Mapping research in the field of private equity: a bibliometric analysis 2023Micro venture capital 2022Private Equity: Antecedents, Outcomes, Mediators, and Moderators 2019Herd behaviour in buyout investments 2021Private Equity as an Intermediary in the Market for Corporate Assets

Explore the map →

Papers that cite the same references — the relational fallback while embeddings are still backfilling.

Imported from OpenAlex (CC0) — nothing here is generated.