Choice of portfolio strategies by private equity firms


Very different portfolio strategies can be observed across PE funds. Some PE funds are highly specialized, whereas others are highly diversified. For instance, the least diversified PE fund in the sample invests only in one financing stage, three industries, and one country. In contrast, the most diversified PE fund includes portfolio companies in three financing stages, eight industries, and 22 countries. Furthermore, while the three smallest PE funds only contain an average of 5.3 portfolio companies, the mean of the three most numerous PE funds adds up to 110 portfolio companies. Finally, the fastest investing PE fund spends its capital in only 4.0 months, whereas the slowest investing PE fund takes 46.5 months to commit its capital.


Tobit Regression Negative Binomial Regression Model Firm Internationalization Portfolio Company Portfolio Strategy 
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  1. 48.
    The higher a VIF for a variable is, the higher the estimated variance of the corresponding coefficient, and hence, the greater the chance that seriuos multi-collinearity issues are present (Neter, Wasserman & Kutner 1990). However, no theory provides a threshold value for VIF to judge for serious multi-collinearity. Neter et al. state 10 to be a useful threshold.Google Scholar
  2. 50.
    For further explanations of the NBRM see Cameron & Trivedi (1986), Wooldridge (2002), and Long & Freese (2001).Google Scholar
  3. 53.
    For further explanations of Tobit regression compare Wooldridge (2002).Google Scholar

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