Paying for Performance in Private Equity: Evidence from Venture Capital Partnerships

• 成果类型: Article
• 署名作者: Huther, Niklas; Robinson, David T.; Sievers, Sonke; Hartmann-Wendels, Thomas
• 署名单位: Indiana University System; IU Kelley School of Business; Indiana University Bloomington; Duke University; National Bureau of Economic Research; University of Paderborn; University of Cologne
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2018.3274
• 发表日期: 2020
• 页码: 1756-1782
• 关键词: venture capital; COMPENSATION; PRIVATE EQUITY; VC partnership; pay-performance relation

摘要

We offer the first empirical analysis connecting the timing of general partner (GP) compensation to private equity fund performance. Using detailed information on limited partnership agreements between private equity limited and general partners, we find that GP-friendly contracts-agreements that pay general partners on a deal-by-deal basis instead of withholding carried interest until a benchmark return has been earned- are associated with higher returns, both gross and net of fees. This is robust to measures of performance persistence, time period effects, and other contract terms and is related to exit-timing incentives. Timing practices balance GP incentives against limited partner downside protection.