2006 Fiscal Year Final Research Report Summary
An empirical analysis of entrepreneurial human capital and start-up financing
| Project/Area Number |
17530191
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| Research Category |
Grant-in-Aid for Scientific Research (C)
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| Allocation Type | Single-year Grants |
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| Section | 一般 |
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| Research Field |
Applied economics
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| Research Institution | Chuo University |
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Principal Investigator |
HONJO Yuji Chuo University, Faculty of Commerce, Associate Professor, 商学部, 助教授 (00328030)
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| Project Period (FY) |
2005 – 2006
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| Keywords | Start-up / Entrepreneur / Human capital / Financing / Initial public offering / Financial (Liquidity) constraints / Internal capital / Performance |
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| Research Abstract |
I investigate start-up financing of Japanese entrepreneurial firms, using several data sources. In this analysis, I shed some light on the relationship between entrepreneurial human capital measured with personal attributes and start-up financing. In addition, I attempt to identify the difference of post-entry performance between the sources of finance.
Firstly, I find that start-up financial constraints vary across entrepreneurial human capital. This result indicates that human capital has indirect effects on start-up financing. Although previous literature has largely ignored the relationship between start-up funding gaps and entrepreneurial human capital, I provide some empirical evidence of this relationship, which suggests that model specification in previous literature remains an important issue.
Then, I examine whether entrepreneur-specific and firm-specific characteristics affect the initial public offering (IPO) intention of entrepreneurs. In particular, it is found that research and development (R＆D) oriented firms are more likely to have the IPO intention. In recent years, some countries, including Japan, have introduced "new stock markets" for innovative firms with high-growth potential, while taking into consideration the National Association of Securities Dealers Automated Quotation (NASDAQ) market in the United States. The finding provides an empirical support for the creation of new stock markets from the viewpoint of entrepreneurs.
Finally, I attempt to examine the effects of start-up financing on post-entry performance. I find that firms financed by individuals (business angels) tend to grow, although those financed by banks do not. This indicates that capabilities and motivation for screening and monitoring start-up firms are different between sources of finance. Thus, the role of banks appears limited to financing new ventures.
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