{"title":"Asymmetric information and valuation frictions in continuation funds","authors":"Jinhyeong Jo , Doojin Ryu","doi":"10.1016/j.frl.2026.109773","DOIUrl":null,"url":null,"abstract":"<div><div>We develop a model of continuation fund transfers under asymmetric information with verification, participation, and rollover frictions. Conditional on observed deal initiation, Limited Partners update their priors before valuation, and the resulting initiation-conditioned beliefs shift the reliability cutoffs for transfer, rollover, and joint feasibility. Our model implies lemons-type selection: verification frictions and participation costs can exclude high-quality assets unless valuation reliability is sufficiently high, and rollover frictions can remain binding even after a favorable valuation signal.</div></div>","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"97 ","pages":"Article 109773"},"PeriodicalIF":6.9000,"publicationDate":"2026-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Finance Research Letters","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S154461232600303X","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"2026/3/9 0:00:00","PubModel":"Epub","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
We develop a model of continuation fund transfers under asymmetric information with verification, participation, and rollover frictions. Conditional on observed deal initiation, Limited Partners update their priors before valuation, and the resulting initiation-conditioned beliefs shift the reliability cutoffs for transfer, rollover, and joint feasibility. Our model implies lemons-type selection: verification frictions and participation costs can exclude high-quality assets unless valuation reliability is sufficiently high, and rollover frictions can remain binding even after a favorable valuation signal.
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