arbiter
JournalsPricingAccount

Deciphering Private Equity Incentive Contracting and Fund Leverage Choice

Timothy J. Riddiough

Journal of Law, Finance, and Accounting2024https://doi.org/10.1561/108.00000066article
AJG 2
Weight
0.30

What the paper says

In this paper I collect fee, leverage, and target return data, using it to calibrate a structural model of private equity fund leverage choice. The empirically calibrated model generates outputs that closely match moments in the data. The modeling process includes developing a tradeoff theory of fund capital structure and a theory of investor return targeting. Catch-up fee provisions in incentive contracts enable more skillful fund managers to extract higher fees while also satisfying investors’ levered return targets. Results indicate that fixed carry hurdle rate and share percentage contracting terms are used to help screen lower-skill fund managers from the PE market.

Open paper page →

Cite this paper

https://doi.org/https://doi.org/10.1561/108.00000066

Or copy a formatted citation

@article{timothy2024,
  title        = {{Deciphering Private Equity Incentive Contracting and Fund Leverage Choice}},
  author       = {Timothy J. Riddiough},
  journal      = {Journal of Law, Finance, and Accounting},
  year         = {2024},
  doi          = {https://doi.org/https://doi.org/10.1561/108.00000066},
}

Paste directly into BibTeX, Zotero, or your reference manager.

Flag this paper

Deciphering Private Equity Incentive Contracting and Fund Leverage Choice

Flags are reviewed by the Arbiter methodology team within 5 business days.

Evidence weight

0.30

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.00 × 0.4 = 0.00
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.