Provincial Preferences in Private Equity

Financial Markets and Portfolio Management, Vol. 20, No. 4, pp. 369-398, 2006

30 Pages Posted: 7 Feb 2005

See all articles by Sofia Johan

Sofia Johan

Florida Atlantic University - Finance; Tilburg Law and Economics Center (TILEC)

Douglas J. Cumming

Florida Atlantic University

Multiple version iconThere are 2 versions of this paper

Abstract

This paper identifies a strong tendency for Canadian private equity investors to finance entrepreneurs that reside in the same province. For all types of investors and entrepreneurial firms, in terms of the numbers of investments (13,729 transactions), 84.42% of investments were intra-provincial. In terms of the total value of these transactions ($20,193,896,909 in 1997 dollars), 61.15% of the investment value was intra-provincial. We provide evidence that certain economic and institutional factors systematically give rise to differences in the frequency of inter- versus intra-provincial investments. We interpret the evidence in relation to the appropriateness of Canada's fragmented provincial securities regulatory structure.

Keywords: Venture capital, private equity, home bias

JEL Classification: G24, G28, G31, G32, G35

Suggested Citation

Johan, Sofia A. and Cumming, Douglas J., Provincial Preferences in Private Equity. Financial Markets and Portfolio Management, Vol. 20, No. 4, pp. 369-398, 2006. Available at SSRN: https://ssrn.com/abstract=662181 or http://dx.doi.org/10.2139/ssrn.662181

Sofia A. Johan

Florida Atlantic University - Finance ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

Tilburg Law and Economics Center (TILEC) ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands

Douglas J. Cumming (Contact Author)

Florida Atlantic University ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

HOME PAGE: http://booksite.elsevier.com/9780124095373/

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