The Investment Process of Private Equity Firms: How does the Affect Heuristic Impact Decision-making?

2013 ◽  
Author(s):  
David Blair Sinyard ◽  
Karen D. Loch
Keyword(s):  
Decision Making ◽  
Private Equity ◽  
Affect Heuristic ◽  
Investment Process

Replicating Private Equity with Value Investing, Homemade Leverage, and Hold-to-Maturity Accounting

2021 ◽  
Author(s):  
Erik Stafford
Keyword(s):  
Private Equity ◽  
Small Firms ◽  
Publicly Traded ◽  
Investment Performance ◽  
Value Investing ◽  
Equity Funds ◽  
Private Equity Funds ◽  
Asset Selection ◽  
Investment Process ◽  
Stock Portfolio

Abstract The contributions of asset selection and incremental leverage to buyout investment performance are more important than typically assumed or estimated to be. Buyout funds select small firms with distinct value characteristics. Public equities with these characteristics have high risk-adjusted returns relative to common factors. Adding incremental leverage to a publicly traded stock portfolio increases both risks and mean returns in this sample. Direct investments in private equity funds earn lower mean returns than a replicating strategy designed to mimic these key economic features of their investment process with public equities and brokerage loans.

BEHAVIORAL FINANCE: A STUDY OF AFFECT HEURISTIC AND ANCHORING IN DECISION MAKING OF INDIVIDUAL INVESTORS

2014 ◽  
Vol 14 (1) ◽  
pp. 59-64
Author(s):  
Jose Fernandes ◽  
Alberto Matsumoto ◽  
Paulo Chagas ◽  
Israel Ferreira
Keyword(s):  
Decision Making ◽  
Behavioral Finance ◽  
Individual Investors ◽  
Affect Heuristic

scholarly journals DEVELOPMENT OF A METHODOLOGY FOR FORMALIZING THE INVESTMENT DECISION-MAKING PROCESS BASED ON THE HOPFIELD NEURAL NETWORK

2019 ◽  
pp. 65-72
Author(s):  
Olga RUZAKOVA
Keyword(s):  
Neural Network ◽  
Neural Networks ◽  
Decision Making ◽  
Investment Decision ◽  
Methodological Approach ◽  
Hopfield Neural Network ◽  
Hopfield Network ◽  
Decision Making Process ◽  
Mathematical Apparatus ◽  
Investment Process

The article presents a methodological approach to assessing the investment attractiveness of an enterprise based on the Hopfield neural network mathematical apparatus. An extended set of evaluation parameters of the investment process has been compiled. An algorithm for formalizing the decision-making process regarding the investment attractiveness of the enterprise based on the mathematical apparatus of neural networks has been developed. The proposed approach allows taking into account the constantly changing sets of quantitative and qualitative parameters, identifying the appropriate level of investment attractiveness of the enterprise with minimal money and time expenses – one of the standards of the Hopfield network, which is most similar to the one that characterizes the activity of the enterprise. Developed complex formalization of the investment process allows you to make investment decisions in the context of incompleteness and heterogeneity of information, based on the methodological tools of neural networks.

scholarly journals A Decision-Making Model of Technological-Focused Government Agency Selection of Technological Start-Up Businesses

2022 ◽  
Vol 19 (1) ◽  
pp. 1749
Author(s):  
Amnard Taweesangrungroj ◽  
Roongkiat Rattanabanchuen ◽  
Sukree Sinthupinyo
Keyword(s):  
Decision Making ◽  
Private Equity ◽  
Multiple Criteria Decision Making ◽  
Government Agencies ◽  
Ideal Solution ◽  
Start Up ◽  
Order Preference ◽  
Fuzzy Mcdm ◽  
Decision Making Framework ◽  
The Government

In developing countries, the government has played an important role in supporting startup businesses in various aspects, primarily through tech-focused government agencies. With a limited budget, the government agencies are critical to select plenty of tech startups for funding, leaving only promising tech startups. Consequently, government agencies inevitably face decision-making problems under uncertain circumstances, like private equity investment situations. Reviewing the relevant decision-making frameworks has identified that a classical multiple criteria decision-making (MCDM) approach is currently used, assuming decision-makers acquire complete information that is not realistic. Moreover, both qualitative and quantitative criteria used in evaluating startup businesses cannot represent the uncertainty which is the fundamental nature of the decision-making circumstance. Thus, this article presents a decision-making framework of tech-focused government agencies for selecting startup businesses based on a fuzzy MCDM of Technique for Order Preference by Similarity to Ideal Solution (TOPSIS). Besides, it identifies selection criteria with mixed research methodologies and determines weights of importance criteria by the Delphi method. Finally, the proposed framework results are fairness, transparency, and eliminating bias in decision-making, including more efficiency when the framework’s ranking orders significantly correspond with actual performances. HIGHLIGHTS Criteria for selecting start-up businesses in technological-focused government agencies A decision-making framework of tech-focused government agencies for selecting startup businesses based on a fuzzy MCDM of Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) The performance of the decision-making framework in selecting startup businesses to acquire high potential tech startups to drive the national economy GRAPHICAL ABSTRACT

scholarly journals A Study on Improving The Distribution Processes. The Case of Miruna Internaţional Impex Ltd.Romania

2017 ◽  
Vol 23 (2) ◽  
pp. 23-28
Author(s):  
Andreea Cristina Bejinariu ◽  
Paula Ganea ◽  
Mădălina Leuca ◽  
Florian Muntean
Keyword(s):  
Decision Making ◽  
Careful Analysis ◽  
Decision Making Process ◽  
New Production ◽  
Investment Projects ◽  
The Future ◽  
Productive Potential ◽  
Long Time ◽  
Investment Process ◽  
Production Capacities

Abstract Investing is a category of spending that engages the future most, depends on increasing and improving the productive potential of an enterprise (through expansion and modernization), the emergence of new production capacities. Because it is necessary to allocate large resources for the investment process, they are for a long time and the decision making process involves a lot of uncertainties. A decision on investment projects must be based on a careful analysis of all aspects of the context, the variables involved and their dynamics.

scholarly journals Chasing the deal with the money: Measuring the required risk premium and expected abnormal returns of private equity funds to maximize their internal rate of return

2013 ◽  
Vol 3 (3) ◽  
pp. 56-69
Author(s):  
Fernando Scarpati ◽  
Wilson Ng
Keyword(s):  
Decision Making ◽  
Asset Pricing ◽  
Risk Premium ◽  
Private Equity ◽  
Investment Decision ◽  
Abnormal Returns ◽  
Expected Returns ◽  
Ex Post ◽  
Investment Decision Making ◽  
Ex Ante

A number of scholars of private equity (“PE”) have attempted to assess the ex-post returns, or performance, of PEs by adopting an ex-post perspective of asset pricing. In doing so a set of phenomena has been recognized that is thought to be specific to the PE sector, such as “money-chasing deal phenomenon” (Gompers and Lerner, 2000) and “performance persistence” (Lerner and Schoar, 2005). However, based on their continuing use of an ex-post perspective, few scholars have paid attention to the possible extent to which these and other PE phenomena may affect expected returns from PE investments. To address this problem this article draws on an ex-ante perspective of investment decision-making in suggesting how a number of drivers and factors of PE phenomena may produce “abnormal returns”, and that each of those drivers and factors should therefore be considered in accurately assessing the required risk premium and expected abnormal returns of PE investments. In making these contributions we examined a private equity investment of a regional PE in Italy and administered a telephone questionnaire to 40 PEs in Italy and the UK and found principally that while size is the most important driver in producing abnormal returns illiquidity alone cannot explain the expected returns of PE investments (cf. Franzoni et al., 2012). Based on our findings we developed a predictive model of PE decision-making that draws on an ex-ante perspective of asset pricing and takes into account PE phenomena and abnormal returns. This model extends the work of Franzoni et al. (2012), Jegadeesh et al. (2009), and Korteweg and Sorensen (2010) who did not consider the possible influence of PE phenomena in decision-making and will also help PE managers in making better-informed decisions

scholarly journals VERBAL ANALYSIS AND ITS APPLICATION FOR THE ASSESSMENT AND MANAGEMENT OF THE INVESTMENT PROJECT RISK IN CONSTRUCTION

2016 ◽  
Author(s):  
Galina Shevchenko ◽  
Leonas Ustinovichius
Keyword(s):  
Risk Assessment ◽  
Decision Making ◽  
Investment Decision ◽  
Investment Decisions ◽  
Investment Project ◽  
Project Risk ◽  
Investment Projects ◽  
Investment Decision Making ◽  
Investment Process ◽  
Verbal Analysis

The paper investigates the investment decision–making, risk assessment and management problems faced by all participants of the investment process in construction. The main object of paper – risk of investment projects in construction. Companies often have to make investment decisions under uncertainty and therefore the study emphasizes the need, for carryng out investigations, developing metodology and intelectual decision making system that would holistically assess the whole available information to the investment project, increase the accuracy of risk assessment, improve project information management, reduce project risk factors for the occurrence of potential and would make informed investment decisions. The created and described verbal analysis method of the real alternatyve classification was integrated into the proposed model and implemented in practice.

Portfolio Managers

2017 ◽  
Author(s):  
Erik Devos ◽  
Andrew C. Spieler ◽  
Joseph M. Tenaglia
Keyword(s):  
Gender Differences ◽  
Decision Making ◽  
Portfolio Management ◽  
Risk Taking ◽  
Disposition Effect ◽  
Portfolio Construction ◽  
Management Process ◽  
Behavioral Biases ◽  
Portfolio Managers ◽  
Investment Process

In the oversight of most funds, the portfolio manager holds the key decision-making power. Often regarded as foundational to the investment process, a few select managers can attract billions of dollars from investors, giving the managers increased prominence, credibility, and compensation. Despite their stature, portfolio managers are not immune to the behavioral biases that other investors exhibit, which can distort the portfolio management process. This chapter offers an overview of portfolio management and compares characteristics of the fund types that portfolio managers oversee. It also reviews several important behavioral biases that portfolio managers display, as well as the consequences that each has on portfolio construction: overconfidence, herd mentality, risk-taking behavior, and disposition effect. The chapter also contrasts the gender differences of portfolio managers and reviews the ramifications for their respective portfolios.

Behavioral Finance: A Study of Affect Heuristic and Anchoring in Decision Making of Individual Investors

2013 ◽  
Author(s):  
Alberto S. Matsumoto ◽  
Jose L. B. Fernandes ◽  
Israel Karlos Ferreira ◽  
Paulo CCsar Chagas
Keyword(s):  
Decision Making ◽  
Behavioral Finance ◽  
Individual Investors ◽  
Affect Heuristic
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