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Expected Returns to Stock Investments by Angel Investors in Groups
Author(s) -
DeGennaro Ramon P.,
Dwyer Gerald P.
Publication year - 2014
Publication title -
european financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.311
H-Index - 64
eISSN - 1468-036X
pISSN - 1354-7798
DOI - 10.1111/eufm.12002
Subject(s) - stock (firearms) , economics , econometrics , expected return , rate of return , excess return , financial economics , absolute return , investment performance , finance , return on investment , portfolio , microeconomics , geography , production (economics) , context (archaeology) , archaeology
Previous research calculates realised internal rates of return on angel investments but does not estimate expected returns. We present the first estimates of expected returns on angel investments by applying a consistent statistical framework to a new data set. Our sample spans 1972 to 2007 with 419 exited investments. Our results suggest that expected returns on stock for angel investors in groups are about 70% per year in excess of the riskfree rate. These expected returns have a large variance and are heavily skewed, with many losses and occasional extraordinarily high returns .