The Determinants of Investment in Private Equity and Venture Capital: Evidence from American and Canadian Pension Funds

18 Pages Posted: 17 Jun 2004

See all articles by Gilles Chemla

Gilles Chemla

Imperial College Business School; CNRS ; Centre for Economic Policy Research (CEPR)

Date Written: November 8, 2005

Abstract

This paper provides a comparative analysis of pension plan allocations to private equity and to venture capital in the United States and in Canada. Although the assets of American funds in our data are worth 10 times those of Canadian funds, their investment in private equity is about 20 times larger. In both countries, asset size is an important determinant of both the decision to invest in private equity and of how much to invest in that asset class. However, asset size does not appear as a significant determinant of investment in venture capital. The difference in pension fund asset sizes appears to explain well the differences in the decision to invest in private equity, but it is not sufficient to explain the differences in the amount invested in this type of assets. We examine other possible explanatory factors, such as geographical location, the institutional environment, and regulatory constraints.

Keywords: Pension fund, private equity, venture capital, assets, type, location, United States, Canada

JEL Classification: G23, G24, G11

Suggested Citation

Chemla, Gilles, The Determinants of Investment in Private Equity and Venture Capital: Evidence from American and Canadian Pension Funds (November 8, 2005). Available at SSRN: https://ssrn.com/abstract=556421 or http://dx.doi.org/10.2139/ssrn.556421

Gilles Chemla (Contact Author)

Imperial College Business School ( email )

South Kensington Campus
London SW7 2AZ, SW7 2AZ
United Kingdom
+44 207 594 9161 (Phone)
+44 207 594 9210 (Fax)

CNRS ( email )

Dauphine Recherches en Management
Place du Marechal de Lattre de Tassigny
Paris, 75016
France
331 44054970 (Phone)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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