Do stressed PE firms misbehave?

For private equity (PE) firms, follow-on funds provide additional streams of management fees for a considerable time. When prospective investors evaluate the performance PE firms' latest funds, they have to rely on valuations reported by firms. The link between fundraising and evaluation is thus an area susceptible manipulation resulting in potentially high stakes. We examine relationship pressure earnings portfolio companies, along with heterogeneity behaviour reputation dry powder. To proxy degree pressure, we develop index based affiliations, stage cycle, frequency. Results suggest that leads more regardless firm reputation. While reputational effect remains unchanged under change funding , powder exhibits strong moderating extreme pressure. results are robust alternative proxies management, indexes, various controls endogeneity concerns. • impact PEs' management. use unique hand-collected fund company-level sample. stress index. Dry