Work

Does risk aversion affect individuals’ interests and actions in angel investing? Empirical evidence from Japan

Year: 2024

Type: article

Abstract: This study explores individuals’ interests and actions in angel investing. Using a sample of Japanese individuals who are interested and engage in general investing obtained from original survey data, we examine whether risk aversion and subjective time discounting are associated with angel investing. To provide a clear picture of potential and actual angel investors, we classify individuals’ attitudes toward angel investing into “no interest,” “interest only,” and “action.” By estimating the marginal effects of risk aversion on angel investment, we find that individuals’ risk aversion is negatively associated with their angel investment actions; that is, individuals with a higher degree of risk aversion are less likely to engage in angel investing. We also find that wealthy individuals are more likely to engage in angel investing. Moreover, among individuals with entrepreneurial experience, subjective time discounting is positively associated with their angel investment actions, suggesting that entrepreneurs with higher subjective time discounting are more likely to engage in angel investing.

Source: Japan and the World Economy

DOI: 10.1016/j.japwor.2024.101253

Authors: Yuji Honjo, Kenta Ikeuchi, Hiroki Nakamura

Institutions: Research Institute of Economy, Trade and Industry, Chuo University, Kurume University

Language: English

Topic: Private Equity and Venture Capital

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $2,860

Funders: Chuo University, Japan Society for the Promotion of Science