Financial intermediaries,ownership structure and the provision of venture capital to SMEs: evidence from Japan |
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Authors: | Douglas Cumming Grant Fleming Armin Schwienbacher |
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Affiliation: | (1) Ontario Research Chair York University – Schulich School of Business, 4700, Keele Street, Toronto, ON, Canada, M3J 1P3;(2) Wilshire Private Markets Group, 4th Floor, East Tower, Otemachi First Square, Otemachi, Chiyoda-ku, Tokyo 100-0004, Japan;(3) School of Finance and Applied Statistics, Australian National University, Canberra, Australia;(4) Finance Group, University of Amsterdam Business School, Amsterdam, The Netherlands;(5) Louvain School of Management, Universite catholique de Louvain, Louvain-la-Neuve, Belgium |
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Abstract: | This paper examines how the provision of venture capital to small- and medium-sized businesses (SMEs) is influenced by the ownership structure of the venture capital provider. We introduce a new and unique dataset from the Japanese venture capital market, comprising data on investment and venture capital activities of 127 Japanese venture capital funds. The data allow us to provide a direct comparison of the behaviour of individual owner-manager venture capitalists versus financial intermediation (e.g., bank’s venture capital divisions). The data indicate owner-manager venture capitalists (financial disintermediation) give rise to much smaller portfolios of SMEs and more advice to entrepreneurs. Across the scope of different financial intermediation structures, including banks, life insurance companies, securities firms, corporations and government bodies, there are further differences in the provision of governance and value-added advice provided to SMEs. Also, the data indicate US-affiliated funds in Japan are more likely to have smaller portfolios and tend to provide more advice to SMEs. |
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Keywords: | Financial intermediation Ownership structure Private equity |
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