Argentum, The Institute for Financial Research (SIFR) and the Norwegian School of Economics and Business Administration (NHH) will arrange the Argentum Symposium “Private Equity: The Road Ahead” on September 24th 2010 in Stockholm.
*The Symposium is fully booked*
The Argentum Symposium has a standard academic format and aims to provide an academic forum showcasing the frontier in private equity research. We plan on having six or seven presentations of recent research papers, with a discussant for each paper. Some of the topics that will be covered are risks and returns, regulation and the impact of private equity on portfolio firms.
Practical Information
Dress code: Business
The Symposium will take place at Grand Hotel Saltsjöbaden in Stockholm between 09.00 and 16.00 on the 24th of September 2010.
Confirmed Academics:
Yael Hochberg is Assistant Professor of Finance at the Kellogg School of Management and a Faculty Research Fellow at the National Bureau of Economic Research.
Berk Sensoy is Assistant Professor of Finance at the Fisher College of Business at Ohio State University.
Ludovic Phalippou is Associate Professor of Finance at the University of Amsterdam and a Research Fellow of Tinbergen Institute.
Jörg Rocholl is Associate Professor at the European School of Management and Technology in Berlin.
Matthew D. Cain is Assistant Professor at the University of Notre Dame
Daniel Ferreira is Associate Professor in Finance at London School of Economics
Program:
Below is a brief presentation of the papers that will be presented at the Symposium as well as the discussant for each paper:
09.00 - 09.30:
Yael Hochberg (Northwestern University): The Size and Specialization of Direct Investment Portfolios
Co-author: Mark Westerfield.
This paper presents a model of portfolio size and specialization in which specializing increases average profitability for any project undertaken, but it excludes a venture capitalist from projects outside its area of specialization. A fund needs to secure a large deal flow to support a large number of investments, and therefore large funds need to generalize. Empirical data from the US supports the predictions of the model: Larger portfolios are associated with less industry and geography specialization and positive factors such as greater experience are associated with larger and more general portfolios.
09.30 - 09.45:
Discussant: Michael S. Weisbach (Ohio State University)
Michael S. Weisbach is Professor and Ralph W. Kurtz Chair in Finance at Ohio State University.
09.45 - 09.55: Questions from the audience
09.55 - 10.25:
Berk Sensoy (Ohio State University): Incentives of Private Equity General Partners from Future Fundraising
Co-authors: Ji-Woong Chung, Léa H. Stern and Michael S. Weisbach
This paper evaluates the importance of the rewards stemming from the effect of current performance on the ability to raise larger funds in the future. These implicit incentives are evaluated in the context of a learning model in which investors use current performance to update their assessments of a general partner's ability. The results suggest that implicit incentives from future fundraising have a substantial impact on general partners' welfare and are likely to be an important factor in the success of private equity firms.
10.25 -10.40:
Discussant: Morten Sorensen (Columbia Business School)
Morten Sorensen is Daniel W. Stanton Associate Professor of Business at Columbia Business School.
10.40 - 10.50: Questions from the audience
10.50 - 11.15: Break
11.15 - 11.45:
Ludovic Phalippou (University of Amsterdam Business School): Private Equity Performance and Liquidity Risk
Co-authors: Francesco Franzoni and Erik Nowak
This paper shows evidence of liquidity risk in private equity returns. The study finds that a one-standard deviation positive shock in aggregate liquidity raises returns between 4 percent and 10 percent annually, depending on the liquidity measure. The paper is also providing a large-sample estimate of the cost of capital for private equity at about 24 percent annually.
11.45 - 12.00:
Discussant: Tim Jenkinson (Oxford)
Tim Jenkinson is Professor of Finance at the Said Business School, and is Director of Oxford Finance and the Oxford Private Equity Institute.
12.00 - 12.10: Questions from the audience
12.10 - 12.40:
Jörg Rocholl (ESMT European School of Management and Technology): Competitive Effects of Private Equity Investments
Co-authors: Hung-Chia Hsu and Adam V. Reed
This paper analyzes companies that compete with companies that receive private equity investments. The study finds that competitors experience a decrease in their stock prices and their operating performance around private equity investments in their industry. The study also finds that the level of specialization, corporate governance, technological innovation, managerial incentives and efficiency are all related to performance differences among competitors at the time of the private equity investment.
12.40 - 12.55:
Discussant: David Thesmar (HEC)
David Thesmar is Professor of Finance at HEC.
12.55 - 13.05: Questions from the audience
13.05 - 14.00: Lunch
14.00 - 14.30:
Matthew D. Cain (University of Notre Dame) : Broken Promises: Private Equity Bidding Behavior and the Value of Reputation
Co-authors: Steven M. Davidoff and Antonio J. Macias
This paper analyzes the contracting structure in private equity buyouts of US targets between 2004 and 2009. The paper examines the provisions which allowed bidders to terminate contracts during the financial crisis and estimates the gains from backing out of these contracts. The authors are also documenting the reputational damage suffered by the private equity industry as a result of this wave of terminations.
14.30 - 14.45:
Discussant: Brandon Julio (LBS)
Brandon Julio is Assistant Professor of Finance at London Business School
14.45 - 14.55: Questions from the audience
14.55 - 15.25:
Daniel Ferreira (London School of Economics): Incentives to Innovate and the Decision to Go Public or Private
Co-authors: Gustavo Manso and André C. Silva
This paper takes a closer look at how public and private ownership structures affect firms’ incentives to choose innovative projects. The paper finds that the optimal decision is to go public when companies wish to exploit the current technology and to go private when companies wish to explore new ideas. The model used links private equity to innovation and creative destruction and generates new predictions regarding the determinants of going public and going private decisions.
15.25 - 15.40
Discussant: Augustin Landier (Toulouse IDEI)
Augustin Landier is Professor at Toulouse School of Economics and Researcher at IDEI.
15.40 - 15.50: Questions from the audience
15.50 - 16.00: Summary
Attendees:
Attendance is by invitation only.
History
Argentum arranged the Argentum Symposium in 2009 in cooperation with NHH and the European Financial Association.
The academics that presented their research and discussed private equity at the 2009 Symposium, included:
- Yael Hochberg (Northwestern University
- Alexander Ljungqvist (New York University)
- Annette Vissing-Jorgensen (Northwestern University)
- Ulf Axelson (Institute for Financial Research)
- Per Johan Strömberg (Institute for Financial Research)
- Tim Jenkinson (University of Oxford)
- Michael S. Weisbach (Ohio State University)
- Florencio Lopez de Silanes (EDHEC Business School)
- Ludovic Phalippou (University of Amsterdam).
- Paul Oyer , Stanford Graduate School of Business
- Phillip Leslie , Stanford Graduate School of Business
- Jerry Cao , Boston College, Singapore Management University
- Josh Lerner, Harvard Business School
- Morten Sorensen , Columbia University
- Dirk Bergemann, Yale University
- Ulrich Hege, HEC Paris
- Miguel Sousa , University of Oxford
- Liang Peng , University of Cincinnati
- Micah S. Officer , Loyola Marymount University
- Oguzhan Ozbas , University of Southern California - Marshall School of Business
- Berk A. Sensoy , University of Southern California - Marshall School of Business
- Phillip Leslie , Stanford Graduate School of Business
- Paul Oyer , Stanford Graduate School of Business