Provincial Preferences in Private Equity
Financial Markets and Portfolio Management, Vol. 20, No. 4, pp. 369-398, 2006
30 Pages Posted: 7 Feb 2005
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: Suggested Citation