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The growth of the private equity industry has spurred concerns about its impact on the economy. This analysis looks across nations and industries to assess the impact of private equity on industry performance. We find that industries where private equity funds invest grow more quickly in terms of total production and employment and appear less exposed to aggregate shocks. Our robustness tests provide some evidence that is consistent with our effects being driven by our preferred channel. This paper was accepted by Amit Seru, finance .

Effective risk management is essential for private equity (PE) funds to navigate economic, market, and operational challenges while maximizing investor returns. This study aims to evaluate the risk management practices employed by private equity funds in South Africa, focusing on the tools used for pre-investment risk assessment and the strategies implemented throughout the investment process. A quantitative approach was adopted, using a semi-structured questionnaire administered to 31 private equity fund managers in South Africa’s Gauteng province. The Mann-Whitney U test, a non- parametric statistical method, was applied to assess the independence of smaller and larger fund groups, given their distinct nature and the non-normal distribution of the dependent variable. The findings indicate that traditional pre-screening risk assessment methods are commonly used by South African private equity funds. Additionally, larger funds tend to co-invest with trusted partners as a key strategy for mitigating risk. The results also reveal that these larger funds more frequently utilize the enterprise value/earnings before interest and tax (EV/EBIT) ratio in their evaluation process. This study supports the Basel II recommendation, which suggests that adopting an audit and risk planning framework can help private equity firms identify the most critical risks and concentrate their risk management efforts accordingly. The survey’s overall results show that cash flow-volatility-based models and stress testing are the most widely utilized tools among the funds studied. This research contributes to the ongoing discourse on risk management in private equity, particularly in the context of South Africa’s emerging economy, offering new insights into a relatively underexplored area.

We analyze the determinants of buyout funds' investment decisions. We argue that when there is imperfect competition for private equity funds, the timing of funds' investment decisions, their risktaking behavior, and their subsequent returns depend on changes in the demand for private equity, conditions in the credit market, and fund managers' ability to influence perceptions of their talent. We investigate these hypotheses using a proprietary dataset of 207 U.S. buyout funds that invested in 1,957 buyout targets over a 30-year period. Our dataset contains precisely dated cash inflows and outflows in every portfolio company, links every buyout target to an identifiable buyout fund, and is free from reporting and survivor biases. Thus, we are able to characterize every buyout fund's precise investment choices. Our findings are as follows. First, established funds accelerate their investment flows and earn higher returns when investment opportunities improve, competition for deal flow eases, and credit market conditions loosen. Second, the investment behavior of first-time funds is less sensitive to market conditions. Third, younger funds invest in riskier buyouts, in an effort to establish a track record. Finally, following periods of good performance, funds become more conservative, and this effect is stronger for first-time funds.

Whether ethical screening affects portfolio performance is an important question that is yet to be settled in the literature. This paper aims to shed further light on this question by examining the performance of a large global sample of Islamic equity funds (IEFs) from 1984 to 2010. We find that IEFs underperform conventional funds by an average of 40 basis points per month, consistent with the underperformance hypothesis. In line with popular media claims that Islamic funds are a safer investment, IEFs outperformed conventional funds during the recent banking crisis. However, we find no such outperformance for other crises or high volatility periods. Based on fund holdings-based data, we provide evidence of a negative curvilinear relation between fund performance and ethical screening intensity, consistent with a return trade-off to being more ethical.

In this Article, we examine whether regulation is needed to protect investors in private equity. We do this by analyzing the performance of de-SPAC transactions that solicited private investment. These private investments in public equity are known as PIPEs. Because PIPE returns are publicly available, we are empirically able to determine whether the limited PIPE investors are getting a fair deal in these investments. We find that deSPAC investors lose about forty-five percent of their investment within two years of the de-SPAC transactions. Furthermore, we find that almost all these losses are limited to those cases when the SPAC sponsors resort to PIPE financing, losing about fifty-five percent of their value abnormally. Hence, our evidence suggests that limited private-fund investors suffer substantial and systematic losses when they make PIPE investments in de-SPAC transactions. Our evidence at least partially justifies the SEC's new rules regarding the regulation of the private funds industry. Moreover, the need to address this matter has become more urgent in light of the August 7, 2025, executive order further opening pension funds' access to private equity markets, thus also exposing the retirement investments of retail investors to these risks.

This paper aims to examine whether managerial skill can be effectively measured using value added and alpha in the Korean equity fund market. We document that fund managers generate positive and persistent skill when measured by both gross value added and gross alpha. Unlike equilibrium-based predictions, alpha retains predictive power for future value creation in the Korean market, reflecting limited scale diseconomies in fund size. We further show that managerial compensation responds to past performance, while a substantial portion of value added remains with investors, indicating incomplete rent extraction. Overall, our findings highlight the importance of market structure in evaluating managerial skill and suggest that value added and alpha serve complementary roles in less competitive fund markets.

This Article offers a broad theory of what distinguishes investment funds from ordinary companies, with ramifications for how these funds are understood and regulated. The central claim is that investment funds (i.e., mutual funds, hedge funds, private equity funds, and their cousins) are distinguished not by the assets they hold, but by their unique organizational structures, which separate investment assets and management assets into different entities with different owners. In this structure, the investments belong to \"funds,\" while the management assets belong to \"management companies.\" This structure benefits investors in the funds in a rather paradoxical way: it restricts their rights to control their managers and to share in their managers' profits and liabilities. The fund investors accept these restrictions because certain features common to most investment funds make these restrictions efficient. Those features include powerful investor exit rights that substitute for control rights and economies of scope and scale that encourage managers to operate multiple funds at the same time. This understanding illuminates a number of key areas of contracting and regulation and refutes the claims of skeptics who say that fund investors would be better off if they employed their managers directly.

Purpose This study aims to show how configurations of the institutional environment, client expectations and fiduciary duty influence private equity (PE) managers in integrating environmental, social and governance (ESG) aspects into the investment decision-making process. Design/methodology/approach The research design combined bibliographic and documentary analysis (including the regulatory framework and secondary sector data) with a phenomenological approach, supported by interviews with managers of PE firms and content analysis. Findings The findings revealed the impact of the sociocultural environment on the adoption of ESG practices in investment decisions, the perception of international pressures to embrace ESG principles that differ from national needs, and the diversification of strategies implemented due to excessive regulation. Originality/value The study’s uniqueness lies in both the phenomenological approach used to comprehend how concerns about ESG practices influence PE fund investment decisions and the identification of factors not typically emphasized in the literature as moderators of this decision-making process.

Many important areas of the law place great confidence in the ability of contracting parties to bargain effectively. In this Article, I question the wisdom of a formalistic faith in bargaining by identifying flaws in the bargaining process at the high end of the market, where parties are sophisticated and have substantial resources to aid them in bargaining.

PurposeThis paper aims to explore the impact of the COVID-19 pandemic on the market timing skills of Islamic equity funds in Asia, Europe and North America.Design/methodology/approachThe authors employed a two-step process. First, a Granger causality test is applied to test the bivariate relationship between Islamic fund indices and stock market ones by highlighting the impact of the COVID-19 pandemic. Second, the methodology of Treynor and Mazuy (1966) is deployed to account for the market timing abilities skills of Islamic fund managers during the pandemic period.FindingsThe investigation revealed mixed results. The European Islamic funds were positively impacted by the stock market as well as by the COVID-19 pandemic context. Additionally, compared to their Asian and North American peers, only European Islamic fund managers have the ability to time the market during the health crisis period.Research limitations/implicationsDespite its contribution to the Islamic finance literature, this study has some flaws. Indeed, the selected sample of three regions, namely Asia, Europe and North America, precludes extrapolating these conclusions. Other regions should be investigated to further our understanding of Islamic equity funds. Furthermore, due to data availability and accessibility, the study period was limited to a specific time of the COVID-19 pandemic. This shortcoming can be addressed through a multiwave investigation, especially since each region was exposed differently to the pandemic.Practical implicationsThe paper provides scholars, portfolio managers and investors with insights regarding the investment dilemma during the COVID-19 pandemic period, especially for those wishing to hedge their pandemic risk exposure and/or diversify their portfolios. Equally, the depiction of potential market timing abilities of Islamic fund managers across the three regions would serve as a guide to identifying the most suitable internationally focused investment strategy.Social implicationsThe paper provides scholars, portfolio managers and investors with insights regarding the investment dilemma during the COVID-19 pandemic period, especially for those wishing to hedge their pandemic risk exposure and/or diversify their portfolios. Equally, the depiction of potential market timing abilities of Islamic funds managers across the three regions would serve as a guide to identify the most suitable internationally focused investment strategy.Originality/valueThe originality of this investigation is that it is the first to examine Islamic equity fund managers and their skills to time the stock markets during the COVID-19 pandemic period in Asia, Europe and North America. The current paper extends the Islamic finance literature.