The Returns to Entrepreneurial Investment: A Private Equity Premium Puzzle? /
We document the return to investing in U.S. nonpublicly traded equity. Entrepreneurial investment is extremely concentrated, yet despite its poor diversification, we find that the returns to private equity are no higher than the returns to public equity. Given the large public equity premium, it is...
Gespeichert in:
- Weitere Titel:
- The Returns to Entrepreneurial Investment
- 1. Verfasser:
- Körperschaft:
- Weitere Verfasser:
- Format:
- Elektronisch E-Book
- Sprache:
- Englisch
- Veröffentlicht:
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Cambridge, Mass.
National Bureau of Economic Research
2002.
- Zusammenfassung:
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We document the return to investing in U.S. nonpublicly traded equity. Entrepreneurial investment is extremely concentrated, yet despite its poor diversification, we find that the returns to private equity are no higher than the returns to public equity. Given the large public equity premium, it is puzzling why households willingly invest substantial amounts in a single privately held firm with a seemingly far worse risk-return tradeoff. We briefly discuss how large nonpecuniary benefits, a preference for skewness, or overestimates of the probability of survival could potentially explain investment in private equity despite these findings.
- Umfang:
- 1 online resource: illustrations (black and white);
- Anmerkungen:
- April 2002.
- Schlagworte: