This study examines the reliability of the interim performance in private equity funds. To do this, we compare the interim internal rate of returns (IRRs) to the final realized IRRs for the liquidated 240 buyout and 224 venture capital funds. We find that interim valuations are generally conservative at the beginning of fund life and prior to adoption of the fair value accounting standards while these are a little aggressively prior to the tech bubble and the financial crisis. Nevertheless, our overall results indicate that interim performance reported by fund managers is reliable predictor of the final realized performance. Our findings are informative to private equity fund investors, policy makers, and regulators in their consideration of the reliability of the interim performance based on fair value estimates.​

Key words: Private equity, Performance, Fair value