NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Oleg Gredil

Tulane University
Freeman School of Business
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New Orleans, LA 70118
Tel: 5043147567

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NBER Working Papers and Publications

August 2016Do Private Equity Funds Manipulate Reported Returns?
with Gregory W. Brown, Steven N. Kaplan: w22493
Private equity funds hold assets that are hard to value. Managers may have an incentive to distort reported valuations if these are used by investors to decide on commitments to subsequent funds managed by the same firm. Using a large dataset of buyout and venture funds, we test for the presence of reported return manipulation. We find evidence that some under-performing managers boost reported returns during times when fundraising takes place. However, those managers are unlikely to raise a next fund, suggesting that investors see through much of the manipulation. In contrast, we find that top-performing funds likely understate their valuations.
 
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