The Relation Between Private Equity Fund Reporting Quality and External Monitors, Third-party Service Providers, and Fund Attributes

We examine variation in the reporting quality of private equity funds, in particular buyout and venture capital funds, relative to external monitoring, third-party service providers, and fund attributes. In contrast to evidence from public markets, we find limited evidence that investors affect reporting quality, specifically the accuracy and bias of net asset values (NAVs) disclosed by private equity funds. That said, we find evidence that fund NAV accuracy and bias varies with auditor involvement and the use of third-party service providers (i.e., valuation specialists, marketers, and administrators). Further, these relations differ across fund types. We provide important evidence for investors and regulators as private equity supersedes public markets as the main vehicle to raise capital