@article {Larocquejpm.2022.1.395, author = {Stephannie Larocque and Sophie Shive and Jennifer Sustersic Stevens}, title = {Private Equity Performance and the Effects of Cash-Flow Timing}, elocation-id = {jpm.2022.1.395}, year = {2022}, doi = {10.3905/jpm.2022.1.395}, publisher = {Institutional Investor Journals Umbrella}, abstract = {Private equity (PE) firms have discretion over the timing of their funds{\textquoteright} capital calls and distributions, making the popular internal rate of return (IRR) an incomplete measure of PE fund performance. Do investors avoid the textbook pitfalls of the IRR when cash-flow timing is partly endogenous? In a comprehensive sample of 6,945 funds, the authors find that more than half of the funds{\textquoteright} IRR is attributable to timing, with substantial variation. The timing component persists across a PE firm{\textquoteright}s funds and facilitates fundraising.}, issn = {0095-4918}, URL = {https://jpm.pm-research.com/content/early/2022/07/12/jpm.2022.1.395}, eprint = {https://jpm.pm-research.com/content/early/2022/07/12/jpm.2022.1.395.full.pdf}, journal = {The Journal of Portfolio Management} }