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Private equity managers with ‘skin in the game’ take fewer risks – study

Study finds that investors can look to reduce a fund manager’s incentive to take risk by requiring them to co-invest

Investors can predict how much risk a general partner is going to take based on the amount of personal capital they invest in their own funds, according to a new study.

The study, published by the Norwegian School of Economics and the Goethe University Frankfurt, found that private equity managers who put more of their own money into funds as co-investors are less likely to select risky companies.

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