Private equity's diversification illusion
Subtitle: economic comovement and fair value reporting
By: Kyle Welch
Contributors: Harvard Business School
Publisher: ProQuest, UMI Dissertation Publishing
Published: 2014
Place of publication: Ann Arbor, MI
Language: eng
Number of pages: 50
Copyright date: 2014
Subjects: Corporations; Accounting; Private equity
Description: This study examines how financial reporting practices have shaped private equity's claims to diversification. Despite research showing that private equity lacks unique economic exposure, private equity firms and trade associations continue to promote private equity's diversification as a key investment benefit. I show that returns based on prior methods of valuation understate the economic comovement of private equity with the market, creating a diversification illusion. As private equity valuation methodologies have changed private equity returns reveal increased systematic risk and correlation to equity markets. Moreover private equity firms also encounter higher--not lower--costs when accessing capital under new valuation methods, a finding at odds with public-market research.
Notes: UMI Number: 3628663.

D.B.A. Harvard Business School 2014 Kyle Welch's thesis.

Includes bibliographical references (pages 33-36).

Photocopy. Ann Arbor, MI : UMI Dissertation Services, 2014.