Research
Our Research Strategy
At IPC, data, research and education improve understanding of the role of private capital in the global economy. An essential first step for generating quality research is access to reliable data. Thus, our top priority is making research-quality data sources widely available to academic researchers.
Access to data on private investments presents challenges, including confidentiality concerns, the proprietary nature of many datasets, and the diffuse nature of private investments. However, we believe that these challenges are best addressed by a deliberate systematic approach through a combined academic effort. In many cases, data owners welcome the benefits derived from confidential analysis of their data by objective academic researchers.
IPC currently focuses on three research areas:
Private Equity Real Estate Active Management
Scale, Scope, and Speed in Private Capital Funds
The substantial growth in both size and scope of the private fund industry has resulted in much discussion about the effects of this growth on performance. In this white paper we examine how a range of size and growth characteristics are related to market-adjusted fund performance. More
Board Diversity in Private Vs. Public Firms
We test whether differences in ownership structure influence race and gender diversity in corporate boards. We find that privately-owned, venture-backed companies appoint a lower proportion of minorities and women to their boards compared to publicly traded firms. More
What Do We Know About Institutional-Quality Hedge Funds?
Using publicly available sources such as trade press and Form ADV filings, we compile a list of 561 “institutional-quality” hedge fund managers that each have at least 1 billion USD in primary hedge fund assets under management.
MorePrivate Equity and Debt Contract Enforcement: Evidence from Covenant Violations
Using the Shared National Credit supervisory data, we find Private Equity (PE) sponsored firms violate loan covenants more often than comparable non-PE firms. However, upon covenant violation, PE-sponsored borrowers experience relatively smaller reductions in credit commitments, suggesting lenders are more lenient with these borrowers. More
Loss Avoidance in Private Equity
Private equity investors rely on reported fund performance to make informed investment decisions. This paper provides evidence that buyout funds manage multiples of invested capital (MOICs) for portfolio companies to avoid incurring and reporting capital losses. In the distribution of deal-level MOICs, we document an
MoreAre Direct Lenders More Like Banks or Arm’s-Length Investors?
I study whether direct lenders, which have been displacing banks in private equity (PE) buyouts, lend more like banks or arm’s-length investors. Using a novel database for direct lender-held loans to PE buyouts, I find that nearly all senior loans originated by direct lenders include financial covenants. More
Is the U.S. IPO Market About to Thaw? IPC Research Notes
The U.S. IPO market is in the midst of an unusually long cold spell. Investors are concerned about how the IPO market, and more broadly the market for private equity exits, has affected distributions to their portfolios. This has led us to wonder how the current episode compares to historical IPO activity and if recent signs (e.g., the recent filing by Shein) suggest the market is thawing. More
Scale Economies, Bargaining Power, and Investment Performance: Evidence from Pension Plans
We explore the relation between the size of a defined benefit pension plan and its choice of active vs. passive management, internal vs. external management, and public vs. private markets. More
Do Investors Overvalue Startups? Evidence from the Junior Stakes of Mutual Funds
Best Paper of PERC 2023 - We show that mutual funds report their junior stakes in startups at 43% higher valuation than model fair values that consider multi-tier capital structures of startups. The latest-issued and most senior security is worth 48% more per share than junior securities held by mutual funds, implying that mutual funds mark junior securities close to par with the senior securities. More
The Better Angels of our Nature?
This paper studies the investment behavior of angel investors in private and public markets. Their angel investment returns in innovative firms are highly skewed and exhibit pronounced performance persistence that is unlikely to be driven by contemporaneous exposure to economy-wide shocks. Investor fixed effects absorb approximately 45%of the total variation in returns, indicating that accounting for persistent individual differences is critical for understanding this market.
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