Liquid Claims on Illiquid Assets: The Economics of Retail Access to Private Markets

2026-02-09

Expanding retirement account access to alternative investments requires delivering illiquid returns to small-balance investors without compromising valuation integrity or liquidity. This paper studies the intermediation process using 110 registered interval and tender offer funds (>$100B AUM, 2015-2024) that offer periodic rather than daily repurchases. The performance gap between these vehicles and institutional drawdown peers averages approximately 130 basis points per quarter. A factor decomposition attributes roughly one-third of the gap to fees and a larger share to imperfect replication of the private-market return stream; liquidity buffers (8-15% of NAV) contribute at the margin. The funds hold an average of 76% illiquid assets, but valuations are frequently stale, with 40% of trading days recording zero NAV changes. Approximately 40% of interval funds face excess repurchase demand in a given quarter. Despite aggregate underperformance, retail-held assets generate comparable IRRs to same-vintage institutional peers while distributing significantly more cash, consistent with managers selecting liquid, distribution-friendly assets to satisfy repurchase obligations. The current equilibrium is one where regulatory frameworks permit access, but the structural costs of liquidity provision limit the transmission of the private equity premium to retail portfolios.

Liquid Claims on Illiquid Assets: The Economics of Retail Access to Private Markets

SocArXiv (OSF Preprints) · 2026-02-09

Expanding retirement account access to alternative investments requires delivering illiquid returns to small-balance investors without compromising valuation integrity or liquidity. This paper studies the intermediation process using 110 registered interval and tender offer funds (>$100B AUM, 2015-2024) that offer periodic rather than daily repurchases. The performance gap between these vehicles and institutional drawdown peers averages approximately 130 basis points per quarter. A factor decomposition attributes roughly one-third of the gap to fees and a larger share to imperfect replication of the private-market return stream; liquidity buffers (8-15% of NAV) contribute at the margin. The funds hold an average of 76% illiquid assets, but valuations are frequently stale, with 40% of trading days recording zero NAV changes. Approximately 40% of interval funds face excess repurchase demand in a given quarter. Despite aggregate underperformance, retail-held assets generate comparable IRRs to same-vintage institutional peers while distributing significantly more cash, consistent with managers selecting liquid, distribution-friendly assets to satisfy repurchase obligations. The current equilibrium is one where regulatory frameworks permit access, but the structural costs of liquidity provision limit the transmission of the private equity premium to retail portfolios.

Liquid Claims on Illiquid Assets: The Economics of Retail Access to Private Markets Preliminary and incomplete

SSRN Electronic Journal · 2026-01-01

Venture Capital and Startup Agglomeration

The Journal of Finance · 2025-04-01 · 10 citations

ABSTRACT This paper examines venture capital's (VC) role in the geographic clustering of high‐growth startups. We exploit a rule change that disproportionately impacted U.S. regions that historically lacked VC financing via a restriction of banks to invest in the asset class. A one‐standard‐deviation increase in VCs' exposure to the rule led to a 20% decline in fund size and a 10% decrease in the likelihood of raising a follow‐on fund. Startups were not wholly cushioned: financing and valuations declined. Startups also moved out of impacted states after the rule change, likely exacerbating existing geographic disparity in entrepreneurship.

Corporate Hierarchy

2025-10-12

We introduce a novel measure of corporate hierarchies for over 3,100 U.S. public firms. This measure is obtained from online resumes of 7 million employees and a network estimation technique that allows us to identify hierarchical layers. Equipped with this measure, we document several facts about corporate hierarchies. Firms have on average ten hierarchical layers and a pyramidal organizational structure. More hierarchical firms have a more educated workforce, higher internal promotion rates, and longer employee tenure. Their operating performance is higher, but they face higher administrative costs.They are more active acquirers and produce more patents, but not higher-quality patents. They exhibit lower stock return volatility and operating asset volatility. We also examine how companies adjust their hierarchies in response to demand and knowledge shocks. We find that pharmaceutical companies increased their number of layers following the Covid-19 pandemic, while companies flattened their hierarchies following the adoption of artificial intelligence (AI) technologies. These findings are consistent with the theoretical predictions of existing models of corporate hierarchies.

Board Dynamics over the Startup Life Cycle

2025-02-15 · 2 citations

We explore the dynamics of venture capital (VC)-backed startup boards using novel data on director entry, exit, and characteristics. At formation, a typical board is entrepreneur-controlled. Independent directors join the median board after the second financing and hold a tie-breaking vote. Their presence is particularly likely when potential VC-entrepreneur conflicts are larger. At later stages, control switches to VCs and independent director characteristics change. These patterns align with key financial contracting theories, but also highlight unique roles of independent directors over the life cycle: mediation followed by advising. Independent directors thus represent another potential source of value-add to startup performance.

Corporate Hierarchy

National Bureau of Economic Research · 2025-08-01 · 1 citations

Corporate Hierarchy

SSRN Electronic Journal · 2025-01-01

Corporate Hierarchy

2025-08-14

We introduce a novel measure of corporate hierarchies for over 3,100 U.S. public firms. This measure is obtained from online resumes of 7 million employees and a network estimation technique that allows us to identify hierarchical layers. Equipped with this measure, we document several facts about corporate hierarchies. Firms have on average ten hierarchical layers and a pyramidal organizational structure. More hierarchical firms have a more educated workforce, higher internal promotion rates, and longer employee tenure. Their operating performance is higher, but they face higher administrative costs. They are more active acquirers and produce more patents, but not higher-quality patents. They exhibit lower stock return volatility and operating asset volatility. We also examine how companies adjust their hierarchies in response to demand and knowledge shocks. We find that pharmaceutical companies increased their number of layers following the Covid-19 pandemic, while companies flattened their hierarchies following the adoption of artificial intelligence (AI) technologies. These findings are consistent with the theoretical predictions of existing models of corporate hierarchies.

Corporate Hierarchy

SSRN Electronic Journal · 2025-01-01