Associate Professor of Finance
Sophie Shive is an Associate Professor of Finance at Notre Dame. She graduated from Cornell University with Bachelor’s and Master’s degrees in Hotel Administration-Finance and from the University of Michigan with a Ph.D. in Finance. She has taught courses in Introductory Finance, Investment Theory and Private Equity at Notre Dame, as well as Capital Markets and Portfolio Management at the University of Michigan.
“Private Equity Returns, Cash Flow Timing, and Investor Choices” with Stephannie Larocque and Jennifer Sustersic Stevens. Working Paper 2019.
In a comprehensive sample, private equity fund lifetimes average 10 years but their cash flow durations average 4 years with substantial variation across funds. This creates cash management challenges for investors and makes the internal rate of return (IRR) an incomplete measure of performance. Do investors consider these facts when choosing between funds? We find that the portion of IRR that stems from cash flow timing - more than half the IRR on average - persists across a private equity firm's funds and negatively predicts future performance, but facilitates fundraising, especially among funds of funds, foundations, private pension funds, and relatively unsuccessful investors.