This study examines how global uncertainty and risk factors drive monthly returns of listed private equity across 13 developed economies during the period from April 2014 to March 2024.
Based on a sample of 1,563 observations, and using a random-effects model, with robust clustered standard errors, the analysis focuses on financial, macroeconomic, and geopolitical uncertainties, along with key macroeconomic indicators such as GDP growth, inflation, credit spreads, industrial production, and unemployment rates.
The findings reveal that financial and macroeconomic uncertainties significantly influence private equity firm performance by reducing its returns. Geopolitical uncertainty, resulting from political instability and global conflicts, further exacerbated these risks. GDP growth and industrial production are found to positively impact firm performance, while inflation, credit spreads, and unemployment rates negatively affect returns.
Based on these results, the study recommends that private equity firms integrate these uncertainty measures into their risk frameworks, enhancing real-time monitoring systems, conducting comprehensive scenario planning, and strengthening stakeholder communication, to build resilience and sustain returns amid evolving global risks.
