Does Risk Aversion Affect Individuals Actions and Interests in Angel Investing? Empirical evidence from Japan

Author Name HONJO Yuji (Faculty Fellow, RIETI) / IKEUCHI Kenta (Senior Fellow (Policy Economist), RIETI) / NAKAMURA Hiroki (University of Tokyo)
Creation Date/NO. April 2022 22-E-040
Research Project Developing an Entrepreneurial Ecosystem
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This study explores individuals’ actions and interests in angel investing, using a sample of more than 7,000 Japanese individuals obtained from original survey data. We examine whether risk aversion and discount rate 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.” The results reveal that individuals’ risk aversion is negatively associated with their actions and interests in angel investing. We also find that wealthy individuals are more likely to engage in and have an interest in angel investing. Moreover, we find that among individuals with entrepreneurial experience, the discount rate is positively associated with angel investing, suggesting that entrepreneurs with a higher expected rate of return are more likely to engage in and have an interest in angel investing.

Forthcoming: Honjo, Yuji, Kenta Ikeuchi, and Hiroki Nakamura. "Does risk aversion affect individuals’ interests and actions in angel investing? Empirical evidence from Japan," Japan and the World Economy.