During contract negotiations with a startup, a venture capitalist (VC) can receive preferred stock and additional cash flow rights, which result in a higher return than that of common stock. Incorporation of contract terms into the payoff to investor calculation not only changes the...

This paper analyzes a comprehensive data set of 160 non venture-backed, 79 venture-backed and 61 bridge financed companies going public at Germany´s Neuer Markt between March 1997 and March 2002. I examine whether these three types of issues differ with regard to issuer characteristics, balance...

The phenomena associated with the performance of newly listed companies has increased the interest of many researchers who have developed a vast literature on long-term underpricing and underperformance, which together with hot and cold issue markets, represent the three anomalies that have...

This study is the first to empirically construct exit returns - the return accruing to venture capitalists (VCs) from investments in portfolio companies - for a large sample of U.S. venture-backed companies. Exit returns are used (1) to document the size and trends in returns for specific...

This article reviews empirical methods to assess risk and return in private equity. I discuss data and econometric issues for deal-level, fund-level, and publicly traded partnerships data. Risk-adjusted return estimates vary substantially by method, time period, and data source. The weight of...

This study finds specification of minimum portfolio returns to be delivered by VCs in contracts that subsist between VCs and their principals is not a necessary condition for incentivization of optimal portfolio performance. Within populations of VCs who are characterized by risk aversion,...

Private equity is still a relatively young asset class, with some unique characteristics. One feature is the very irregular timing of cash flows, and a consequence of this is that private equity relies on measures of returns that are not standard in other asset classes. As such, new investors...

This paper studies the first day return of 227 carve-outs during 1996-2013. I find that the first day return of newly issued subsidiary stocks is explained by the reporting distortions in the pre IPO period, conditioned on whether the executives and directors of the subsidiary received stock...