Journal article
Size, returns, and value: do private equity firms allocate capital according to manager skill?
- Abstract:
- Using a novel dataset linking private equity (PE) deals to individual managers, we document evidence of manager skill in terms of generating net present value (NPV), a performance measure that captures both scale and returns. PE firms have strong economic incentives to raise larger funds and execute larger deals. While relative returns decline with scale, NPV persists and even increases. Skilled managers are entrusted with more capital and achieve better labor market outcomes, and approximately 40% of NPV is attributable to internal capital allocation decisions. These findings highlight the role of PE firms in creating value through performancebased capital deployment.
- Publication status:
- Published
- Peer review status:
- Peer reviewed
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- Files:
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(Preview, Version of record, pdf, 831.4KB, Terms of use)
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- Publisher copy:
- 10.1111/jofi.70036
Authors
- Publisher:
- Wiley
- Journal:
- Journal of Finance More from this journal
- Publication date:
- 2026-04-03
- Acceptance date:
- 2025-09-25
- DOI:
- EISSN:
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1540-6261
- ISSN:
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0022-1082
- Language:
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English
- Keywords:
- Pubs id:
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2298421
- Local pid:
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pubs:2298421
- Deposit date:
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2025-10-06
- ARK identifier:
Terms of use
- Copyright holder:
- Braun et al
- Copyright date:
- 2026
- Rights statement:
- © 2026 The Author(s). The Journal of Finance published by Wiley Periodicals LLC on behalf of American Finance Association. This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.
- Licence:
- CC Attribution (CC BY)
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